Hero Honda Continues Bull Run

Delhi Daredevils may be struggling hard in the ongoing IPL tournament, but its main sponsor – Hero Honda, continues its dream ride in the business of manufacturing and selling two-wheelers. The world’s largest two-wheeler maker beat street expectation by posting a 599 crore-rupee net profit during the Jan-March ’10 quarter.

That’s a strong 49% growth in revenue over the same period last year. The quarter also saw the Delhi based company clock quarterly sales of over a million bikes, for the fourth consecutive quarter. This takes the company’s total sales during 2009-10 to 4.6 million units, or a 23.6% growth over last year. The earlier stated estimate was 4 million units.

With the best ever quarterly sales in Q4, Hero Honda also crossed the 3-crore mark in sales since it started the joint venture with Honda. The target for the current financial year is 5 million units. To achieve this goal, Hero Honda will launch 8-9 new models, says a top executive. FY 10 saw 9 launches from hero Honda. The company will also invest 300-350 crore rupees during this fiscal. An additional investment of 2,000 crore rupees is expected to be made in setting up the company’s fourth plant.

Hero Honda’s profitability also grew to 17.4%, from 14.1% during the previous year. Even as there’s a celebratory bullish mood in the company, there’s also a word of caution from its MD & CEO, Pawan Munjal. He says, “...going forward, we will have to keep a close watch on the commodity prices movement, and other factors such as inflation and interest rates scenario. These factors will play a crucial role in the industry growth and profitability in days to come.”