Hero MotoCorp misses Q1FY24 profit view on reduction in sales volume

BENGALURU (Reuters) -India's largest motorcycle maker Hero MotoCorp on Thursday missed first-quarter profit estimates, hurt by a drop in sales volume.

The company's standalone profit after tax came in at 8.25 billion rupees ($99.9 million), up 32% from a year ago, but lower than analysts' estimate of 8.86 billion rupees as per Refinitiv data.

The results are in contrast with rivals Bajaj, Eicher-owned Royal Enfield, and TVS Motor, all of which topped estimates.

Indian bike makers have been struggling to return to pre-pandemic sales volumes, as costlier entry-level offerings deter buyers in the key rural market from making purchases.

Rural India traditionally accounted for a majority of all two-wheeler sales, with cheaper 100cc offerings, including Hero's top-selling Splendor motorcycle, accounting for 70% of sales.

However, the company's sales volumes have dropped in recent years, with sales in the quarter down 2.7% to 1.35 million units from a year before.

Retail inflation also continued to squeeze household incomes despite easing from last year, with food prices surging due to erratic monsoon rains.

Quarterly revenue rose 4.5% to 87.67 billion rupees, led largely by a price hike taken due to new emission norms that made it costlier to produce vehicles.

Meanwhile, the company said earlier this week that it had gotten over 25,000 bookings for the X440, the world's cheapest Harley-Davidson.

The company has also seen India's financial crime fighting agency visit two of its offices and is being investigated by tax authorities over its links to a vendor.

Shares of Hero closed down 0.8% ahead of the results.

($1 = 82.5830 Indian rupees)

(Reporting by Nandan Mandayam in Bengaluru; Editing by Varun H K)