Hero MotoCorp Ltd.'s second-quarter profit declined but stayed ahead of analysts' estimates on lower tax expenses and raw material costs.
The two-wheeler maker's profit fell 10.3 percent over last year to Rs 875 crore during the July-September period, according to its stock exchange filing. That compares with the Bloomberg consensus estimate of Rs 775 crore.
Revenue fell 16.7 percent on a yearly basis to Rs 7,571 crore. Analysts tracked by Bloomberg had estimated Rs 7,560 crore.
The contraction came as the company's sales volumes fell 20.1 percent year-on-year to 16.91 lakh units during the quarter as the auto industry grapples with a prolonged slowdown. The company, however, remained optimistic.
“Our retail sales during the ongoing festive season have been quite steady so far, thanks to the new motorcycles and scooters that we have launched recently, and our slew of innovative schemes for customers,” Niranjan Gupta, chief financial officer at Hero MotoCorp, said in the earnings statement.
The company's operating income, or the earnings before interest, taxes, depreciation and amortisation, however, fell 20.2 percent year-on-year to Rs 1,101 crore in the quarter ended September—the consensus estimate was Rs 1,025 crore. Operating margin contracted by 70 basis points to 14.5 percent during the period from 15.2 percent—analysts had forecast 13.6 percent.
The company has adopted the lower corporate tax rate introduced by Finance Minister Nirmala Sitharaman last month. Also, the company's tax expense more than halved to Rs 162.9 crore compared to Rs 472.17 crore for the same period last year.
Shares of Hero MotoCorp closed 1.4 percent higher ahead of the earnings announcement compared with the NSE Nifty 50's 0.1 percent gain. The stock has declined 10.2 percent so far this year.
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