Hero Honda Motors Ltd, India's biggest motorcycle maker, reported its largest fall in quarterly profit in more than three years as raw materials prices eroded gains from higher sales.
"We do foresee margins to remain under pressure in the short term," Hero Honda Managing Director Pawan Munjal said in the statement. "For the past few quarters, the industry has faced a multitude of issues with constraints in supply of components and rising input costs."
Motorcycle maker said it spent 44 per cent more on steel, rubber and other materials in the quarter as economic growth in India and China improved commodity prices. raised prices of its motorcycles by as much as Rs1, 500 in December. Fight may rise for the New Delhi-based company as Honda Motor Co works to develop its fully-owned Indian unit after consenting to sell its 26 per cent stake in Hero HondaHero Honda.
"Rising commodity prices have clearly dented this quarter's profit," said Gaurant Dadwal, a Mumbai-based analyst at Jaypee Capital Services Ltd., who has a ‘sell' rating on the stock. "With their price increase in December, they should be able to recover their margins."