Hero MotoCorp Q1 FY25 earnings: Higher volume, realisation boost net profit

The automaker reported a 36% on-year growth in its standalone profit to Rs 1,122.63 crore, primarily driven by double-digit growth in volume-led revenue and operating profit growth.

By Kiran Murali

13 Aug 2024

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Hero MotoCorp Q1 FY25 earnings: Higher volume, realisation boost net profit

India's largest two-wheeler maker Hero MotoCorp Ltd. today posted a 36% growth in its net profit for the first quarter of the financial year 2025 on a year-on-year basis. The profit was driven by robust double-digit growth in revenue and operating profit. Better realization and volume also boosted the company’s margin during the period.

The New Delhi-based automaker clocked Rs 1,122.63 crore in standalone net profit during the three months, against Rs 824.72 crore in the year-ago period. In the year-ago period, the company had also recorded a one-time loss of Rs 159.99 crore on account of some VRS-related expenses. Revenue from operation grew 16% on year to an all-time high of Rs 10,144 crore.

"We continue to be on the profitable growth journey, crossing Rs 10,000 crore revenue for the first time ever, accompanied by highest ever underlying PAT," Hero MotoCorp Chief Executive Officer Niranjan Gupta said.

The topline growth reflects strong growth in two-wheeler volumes, higher prices and a richer product mix. The automaker sold 15.35 lakh two-wheelers during the quarter, compared with 13.53 lakh units sold in the year-ago period. Unlike the passenger vehicle and commercial vehicle segments, the two-wheeler segment saw a strong uptick in volumes in April-June, driven by a gradual recovery in rural sentiments since the last festival season.

Hero MotoCorp's core strength has been in the entry-level, or 100-110 cc segment and had been struggling in the premium market due to its limited offerings. However, last year, the company shifted its focus toward 125cc and premium segments. The company had the highest number of product launches in FY24, more in the premium and 125cc segments - Xtreme 125R, Xtreme 200S, Xtreme 160R 4V, Harley-Davidson X440, Karizma XMR, and the Mavrick 440.

"We are seeing a sharp recovery in market share in the 125 cc segment, charged by the new model Xtreme 125 cc, while we continue to maintain formidable market share in entry and deluxe 100/110 cc segment of over 70% powered by our brands like Splendor, Passion, and HF deluxe," Gupta said.

On the profitability front, the automaker’s EBITDA margin, or operating profit margin improved to 14.4% from 13.8% in the year-ago period, as per our calculations. The EBITDA rose 21% on year, to Rs 1,460 crore. The company’s realisation is estimated to have improved in single digits on the back of a better mix of higher value margin products, and higher average selling price.

Hero MotoCorp's total expenses during the quarter increased almost 15% on year to Rs 8,882 crore, while the cost of raw materials consumed rose only by 10% to Rs 6,618.5 crore. The net profit rose at a much higher rate than that of the operating profit primarily because the company had booked a one-time loss of Rs 159.99 crore in the year-ago period.