Hero Moto

The company missed estimates on the net profit front on account of higher raw material costs which was due to higher metal prices and currency fluctuations, full effect of that in Q2 was felt in Q3. Consequently, the company for Q3FY14 posted a 11% (YoY) rise in net sales at Rs.6876 crore and net profit came in at Rs.525 crore, up 7.5%. This was way below estimates of around Rs.610-620 crore. Yet, all in all, the numbers were encouraging given the sluggish demand scenario.

Raw material costs rose 13% and the other major jump was in ‘other expenses’ which rose 29%. Net profit was also hit by the higher tax outgo, which YoY has doubled from 95 crore to 192 crore; this was on account of cessation of tax benefit from its Haridwar plant. Its EBITDA came in at Rs.897 crore, up 15% (YoY) while margins, sequentially, fell from 14.5% to 13.01%. The company has planned major things during the Auto Expo in Delhi in Feb. Two days ago, it unveiled a 150cc, diesel-powered concept motorcycle, which may potentially change the way two-wheeled vehicles are made in the country. It hopes to beat the blues with new product launches and expects Q4 to be much better than Q3.