Hero MotoCorp March quarter profit rises 71% to Rs814.16 crore

New Delhi: Hero MotoCorp Ltd, India’s largest two-wheeler maker, on Thursday said fiscal fourth-quarter profit rose 71% to Rs.814.16 crore on higher motorcycle sales.

The company’s total income increased 10.6% to Rs.7,512.17 crore in the three months ended 31 March from a year earlier.

Hero MotoCorp sold 1.72 million two-wheelers in the quarter compared with 1.57 million in the year-ago period.

“The improved profit margins were the combined result of the highest-ever quarterly sales of 1,721,240 units and several margin improvement initiates taken during the period,” the company said in a statement.

The firm’s earnings before interest, tax, depreciation and amortization or Ebitda for the March quarter stands at 15.65% as against 12.34% in the corresponding period last year.

Chairman and managing director Pawan Munjal said that Hero MotoCorp has worked on becoming a more profitable company. “In FY16, we made strong progress towards our strategic goals and delivered impressive performance, both in terms of sales and financials in the second half of the year, while the industry continues to remain sluggish and sentiments are still subdued,” Munjal said. “The industry hopes for a good monsoon, which may help market sentiments to improve towards the second half of this fiscal.”

Profits have fallen in four of the past five quarters in the worst run since the financial crisis, data compiled byBloomberg show. Good rainfall would boost farm output and improve demand for everything from motorcycles to smartphones and tractors. CLSA Asia-Pacific Markets estimates improved rural consumption could increase GDP by as much as a percentage point in the fastest-growing major economy in the world.

The forecast for the arrival of the monsoon in India will be announced on 15 May, science and technology minister Harsh Vardhan told the Lok Sabha during Question Hour on 4 May.

In April, India Meteorological Department said that monsoon rainfall will be 106% of the long-period average, with a 94% probability that it will be normal to excess. The monsoon is considered normal when the rainfall is 96 to 104% of the long-period average and is considered above normal when it is 105-110%.

In an analyst call, Ashok Bhasin, head of sales, marketing and customer care at Hero, said that while there has been slight improvement in sentiment in the past couple of months, demand in rural India is still sluggish. “Urban market is growing at 5-7%, while rural is growing at 1-2%,” Bhasin said.

As much as 30% of total two-wheeler sales come from rural India. “Some part of country has been doing well. Problem is in central India. Having said that, urban is still leading rural,” he said.

The company’s board also approved a final dividend of Rs.32 per share for the year ended 31 March.

Shares of Hero MotoCorp dropped 0.13% to Rs.2,893.95 on BSE, while the benchmark Sensex rose 0.64% to 25,262.21 points. Hero’s earnings were declared after the end of trading.

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