As volume challenges persist, Hero MotoCorp eyes recovery across segments

Margins should improve on lower raw material costs, operating leverage

Except for a slight slip in profitability, the October-December quarter performance of the country’s largest two-wheeler maker — Hero MotoCorp — was broadly in line with Street estimates.

Even as volumes declined 4 per cent year-on-year (YoY), overall revenues saw an increase of 2 per cent, given higher revenue from spares and an uptick in realisations.

A sharp fall in exports, a lower share of the 125cc and higher segment, and muted rural sentiment dented volumes in the quarter.

Its gross profit margins saw a sequential improvement of 250 basis points (bps), given price hikes over the past few quarters.