Hero MotoCorp sees strong quarter ahead driving on wedding sales, harvest

Despite a weak set of numbers in Q4, two-wheeler market leader Hero MotoCorp said better days are ahead for the segment due to the return of the wedding season and a bumper Rabi crop.

Motorcycle and scooter dispatches increased year-on-year (YoY) in April for the first time in ten months, shows monthly sales data from vehicle makers. An early harvest coupled with a pent-up demand for weddings and festivals bumped up sales.

Apart from the marriage season, there are several auspicious days till July 15 that will help two-wheeler sellers boost their sales. “We have seen rural as a driver. Wheat procurement, exports, all have been very positive and we are seeing that in our business that rural and semi-urban sales are looking extremely strong,” said Ranjivjit Singh, chief growth officer at Hero MotoCorp.

He pointed out that festive sales in Gudi Padwa (Marathi New Year), Ugadi (Telegu New Year) and Akshay Tritiya has been multiple times those of the past two years.

Singh said the company is comfortable with its current inventory level, which is around six weeks.

Hero’s growth in sales also came on the back of price hike taken by the company to counter inflation in commodity prices. Hero MotoCorp increased product of price by around Rs 1,000 on showroom price.

“The kind of shock that the auto industry has gone through in the last few years, no industry has been impacted by such shockwaves. The economic growth has been soft owning to the pandemic but that is going to bounce back just like other macro indicators. Along with that vehicle ownership is still under penetrated in the country. So the scope of growth remain strong and that doesn’t go away due to a few odd quarters,” said Niranjan Gupta, Chief Financial Officer at Hero.

In April, the maker of Splendor and Passion bikes saw its monthly dispatches advance 12.4 per cent year on year. The company attributed the growth to the opening of the economy and government policy support.

The improvement in retail sales also came on the back of the company rolling out multiple attractive financing schemes. “About 65-70 per cent of our customers are first-time buyers who don’t have a credit history. We are going to be rolling out and ensure financing for all our customers in urban, semi-urban or rural going ahead,” Chief Growth Officer Singh said.

Singh said that the growth of first time buyers will continue to be strong and the company will continue to increase as it will focus on entry level products. “We will further strengthen our 110 cc segment this year,” he said.

Standalone net profit for Hero MotoCorp stood at Rs 627 crore for the March quarter, down 28 percent compared with Rs 869 crore in the last year period.