Margin pressure ahead for Hero MotoCorp

Transition to BS-IV emission norms, higher commodity costs could hurt

Hero MotoCorp posted better-than-expected December quarter (Q3) performance, but the going may not be easy in the coming quarters. One, the Q3 show topping estimates is partly due to already low expectations on note ban. Two, even as demand is seen recovering, there could be higher operating profit margin pressures going ahead.

For Q3, revenues at Rs 6,364 crore were down 12.6 per cent year over year as two-wheeler sales at 1,493,000 units were down 12.8 per cent due to note ban, but slightly higher than estimates of Rs 6,315 crore.

Given muted sales, profits were expected to fall. Operating or underlying