India's Hero MotoCorp posts Q4 profit beat, to set up two-wheeler unit in Brazil

Hero MotoCorp, India's largest motorcycle maker by market share, reported a bigger-than-expected rise in fourth-quarter profit on Wednesday and said it will set up a unit in Brazil to make two-wheelers to bolster international sales. Two-wheeler sales have grown steadily in India over the years, including by 25 per cent in the latest quarter, driven by continued momentum in the 125 cc motorcycle segment, according to analysts.

The segment makes up most of the Splendor motorcycle maker's fleet, and its recent launch of the 'Xtreme 125R' had a strong initial performance, they added.

The company's standalone profit rose 18.3 per cent year-on-year to ₹10.16 billion ($121.7 million) in the quarter ended March 31 against analysts' average estimate of 10.06 billion rupees, per LSEG data.

Hero MotoCorp said it is looking to grow international sales in its key export market of Latin America, adding that it plans to set up a unit in Brazil that will be involved in manufacturing and distributing two-wheeler vehicles, parts, and accessories.

"As far as Brazil is concerned, we have tested our current product range through consumer clinics there," CEO Niranjan Gupta said in a post-earnings call, adding that the vehicles made there will use a blend of 27 per cent ethanol with gasoline for fuel, called E27.

Hero's plans to enter the Brazilian market were first reported in 2014, but the plans were delayed as the country's government mandated the use of a gasoline-ethanol blend for fuel.

Hero has six manufacturing plants in India, and one each in Colombia and Bangladesh. Rival Bajaj Auto, which beat fourth-quarter profit estimates, has also been planning to set up its own manufacturing plant in Brazil, according to media reports from last year.

TVS Motor, which reported alongside Hero MotoCorp on Wednesday, missed estimates.