The country's largest two-wheeler maker Hero MotoCorp expects the two-wheeler industry to bounce back in the current fiscal with economic activity picking up and high grain prices augmenting rural incomes.
With macro economic indicators looking positive, the company expects industry to grow in double digits in current financial year. "The macro indicators are really looking good, the GST collection we have all seen is all-time high in April, the e-way bills have picked up, I would say all sectors of economy have opened up," Hero MotoCorp CFO Niranjan Gupta said in an analyst call.
Grain prices are high, they are augmenting rural income, monsoon forecast is decent, and so on and so forth, and it is clearly evident also that while Covid may not have gone away, everyone has learned now to get on with their livelihoods and hence consumer confidence and spending are bouncing back easily and actually solidly, he noted.
"Already, we are seeing signs in April and we have no reason to believe why two-wheeler industry cannot grow double-digit in FY2023," Gupta stated.
Commenting specifically on the growth prospects of the company,
he noted: "We will have multiple products and variant launches in
the fiscal and added with all the actions already taken, we are confident
of gaining market share and hence growing ahead of the industry."
For the 2021-22 fiscal, Hero MotoCorp reported a consolidated profit
of Rs 2,329 crore, down 21 per cent from Rs 2,936 crore in 2020-21.
Revenue from operations dropped to Rs 29,551 crore from Rs 30,959
crore in FY21.
Gupta said that the entire two-wheeler industry would like to go
back to the FY2019 peak as soon as possible.
"We got to look at fundamental underlying factors which play to
the long-term growth of two-wheeler industry, all those factors are
intact and I will repeat those, whether it is under penetration,
the need for mobility, whether it is a pent up that has happened
in the last 3-4 years, the big pool that is developing, which should
actually now propel the replacement demands to be much bigger," he stated.
Besides, better finance options could also aid in the sales growth
going ahead, he added.
"So I think the fundamental growth levers remain intact. How fast
it happens, we will have to see," Gupta said.
Listing out challenges, he noted: "One of the things that is an
area of concern for industries across the board is the cost inflation,
which is triggered now by the geopolitical situation as we all know.
Of course, this will be a watch out, but we are no stranger to commodity
inflation, we have been seeing cycles in the past as well as recently."
The company will continue to navigate this space through combination
of judicious price increases, cost savings and of course broad-based
portfolio growth, including premiumisation of certain models, he added.
On the company's electric product roll out, Gupta said the two-wheeler
major will be unveiling its first model on July 1, 2022.
"We want to ensure that through rigorous testing the product we
put in the market is of the right quality and safety parameters as
we have always done earlier. For us, customer comes first and business
will follow," he added.