High rates dent Hero Honda net 5.4%

Net profit of India's biggest two-wheeler manufacturer Hero Honda dipped by 5.39 per cent as high interest and input rates eroded the margins of the company.

The company has posted a net profit of Rs 204.33 crore for the reporting quarter as against Rs 215.97 crore posted in the corresponding quarter of the previous year.

Income from operations, however, has grown by 4.45 per cent to Rs 2,391.36 crore for the same quarter compared with Rs 2,289.44 crore for the corresponding quarter of the previous year.

Pawan Munjal, MD and CEO, Hero Honda Motors, said, "We have been focusing on cost management across functions. There has also been some respite in input costs such as aluminum during the last quarter. As for the future, a lot will depend on the interest rates movement, and commodity prices."

Profit before tax has decreased by 4 per cent at Rs 302.36 crore compared with Rs 315.06 crore. High raw material costs and other expenditure impacted the margins before tax.

Arvind Jain, research auto analyst, Religare Securities, said, "Even as the margins for the quarter were at the backdrop of falling sales, it has exceeded our expectation. Advertising expenditure has impacted the company in a mild way. Margins will once again be under pressure in the current quarter after it declared discounts of certain models in addition to heavy advertising expenditure expected for the new bike, Hunk."

Sales of bikes for the company during the quarter stood at 7.56 lakh (7.23 lakh). The company launched two models during the three month period.

It has said that it would continue to enhance its product portfolio year on year.

The company is hopefully of the ongoing quarter for a revival as the festive season is expected to boost sales. The newly launched bike "� Hunk"� will be the company's best bet for the season.