Hero MotoCorp to raise prices by up to Rs 3,000 from July 1; stock up 3%

Shares of Hero MotoCorp, the world's largest manufacturer of scooters and motorcycles, were up 3 per cent at Rs 2,994.55 on the BSE in intra-day trade on Wednesday after the company announced that it would be undertaking price increases of up to Rs 3,000/unit on its product range depending on model to pass on hike in input costs.

Hero MotoCorp will make an upward revision in the ex-showroom prices of its motorcycles and scooters, with effect from July 1, 2021,” the company said in exchange filing.

The price hike has been necessitated to partially offset the impact of continuous increase in commodity prices. The company continues to drive cost savings program aggressively, in order to minimize the impact on the customer, Hero MotoCorp said.

The company further said, the price hike across the range of motorcycles and scooters will be up to Rs 3,000 and the exact quantum of the increase will depend on the basis of the model and the specific market.

Earlier, the company had said it would be taking price hike of up to around 2 per cent to mitigate sharp commodity cost inflation.

While announcing the March quarter (Q4FY21) results, Hero MotoCorp’s management said “A healthy monsoon and harvest season and a rebound in GDP should aid the industry’s recovery from Q2 onwards. The company also expects a significant growth in its global business with a renewed thrust on developing key-overseas markets.

“Near-term demand may remain subdued due to pandemic-related restrictions. However, we expect a recovery from Q2FY22 onward. HMCL remains a beneficiary of this uptrend, and we expect revenue/earnings CAGRs of 13 per cent/16 per cent over FY21-24E,” analysts at Emkay Global Financial Services said in Q4FY21 result update.

“In FY21 commodity inflation impact stood at 600-700 basis points (bps), which has been offset by price increases of ~400bps and cost savings (Leap program) of ~300bps. Similarly, commodity inflation impact in FY22 is expected to be offset through combination of price hikes and cost savings. Cost savings have been achieved with reduced usage of precious metals and other efforts,” the brokerage firm said.

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