(Reuters) -Hero MotoCorp, India’s top motorcycle maker by volumes, reported a bigger-than-expected rise in third-quarter profit on Thursday, helped by higher sales of its mid-level models such as the ‘Xtreme 125R’.
The company’s profit increased 12% to 12.03 billion rupees ($137.4 million) in the three months to December 31, topping analysts’ average estimate of 11.25 billion rupees, according to data compiled by LSEG.
Hero’s motorcycle and scooter sales grew just 0.3% in the quarter, marking their weakest growth since July-September 2022. That dragged revenue growth down to 5% from 11% in the previous quarter.
However, sales of its more profitable 125cc motorcycles, such as the ‘Xtreme 125R’, jumped 53%, which helped it offset weak sales of entry-level motorcycles such as ‘Splendor’ and also helped bolster margins, analysts have said.
Entry-level motorcycles account for three-fourths of Hero’s overall sales.
The company’s main rivals TVS Motor and Bajaj Auto both missed profit estimates for the quarter. However, their margin and export growth were well received by the market.
Industry-wide domestic two-wheeler sales, however, slowed to a 3% increase in the previous quarter from a 16% jump in the two quarters before that.
Last week, Hero said CEO Niranjan Gupta would step down effective April 30, and also said it would hive off its electric vehicle business into a separate unit.
Hero’s shares closed down about 1% before reporting results. The company on Thursday also declared a dividend of 100 rupees a share.
($1 = 87.5880 Indian rupees)
(Reporting by Nandan Mandayam in Bengaluru; Editing by Savio D’souza, Sonia Cheema and Mrigank Dhaniwala)
