BENGALURU (Reuters) -India’s largest two-wheeler maker Hero MotoCorp narrowly missed first-quarter profit estimates on Tuesday, hurt by weak average prices, even as sales remained strong.
The company reported a standalone profit after tax of 11.23 billion rupees ($133.8 million) for the quarter ended June 30, up 36% from last year. Analysts, on average, expected a profit of 11.78 billion rupees, per LSEG data.
The standalone results do not include the business of its subsidiaries or associates, including Ather Energy and Hero FinCorp.
The company leads India’s two-wheeler market with a nearly 30% share, and its closest rival is Japan’s Honda, which has a 28.4% share.
Hero’s average selling prices, or revenue per two-wheeler sold, edged up 2% to about 66,000 rupees.
Amit Hiranandani, automobile sector lead analyst at brokerage SMIFS, said that the weak average selling price could be because of lower spare parts sales and lower revenue from exports. Exports make up about 3% of Hero’s wholesales, according to previously released sales data.
However, in the domestic market – where its motorcycles like Splendour and Deluxe are sought after, particularly in rural India, remained strong.
Sales data released last month showed Hero shipped 12.7% more units to dealers in the reporting quarter, boosted by hopes of good monsoon in the latter half of the year, which would boost crop yield and thus farmers’ earnings.
The rural market accounts for a little over half of India’s total two-wheeler sales.
The company’s revenue rose 15.7% to 101.44 billion rupees, although it also missed analysts’ estimate of 105.41 billion rupees.
Hero’s domestic sales had declined 2.7% in the year-ago period as a weak monsoon hurt farmers’ income prospects.
($1 = 83.9320 Indian rupees)
(Reporting by Varun Hebbalalu and Nandan Mandayam in Bengaluru; Editing by Varun H K)
