Shares of all three motorcycle manufacturers were in the red on Wednesday.

Hero Honda Motors was down by 3.8% at Rs 181.20 on the BSE, with the stock plunging to a 52-week low. A modest volume of 320,000 shares was recorded on the counter. Though the shares of other bike makers were down, the volumes were thin. Bajaj Auto was down by 1.5% at Rs 508 and TVS Motor was down by 1.3% at Rs 404.45. Only 10,300 shares changed hands on the BAL counter whereas just 1,204 shares changed hands in TVS Motor. The latter is a thinly traded stock.

The fall in bike scrips was on concerns that the Q4 results will be lacklustre unlike in the past. In a Q4 results preview note, local brokerage HDFC Securities has predicted a decline in earnings of two-wheeler companies. “Given the subdued demand conditions and pressure on realisations, we expect lower revenue growth in Q4 of FY 2002-03. Margins across the sector are likely to remain under pressure due to extensive advertising during the Cricket World Cup, rising steel prices and higher marketing expenses on new product launches. With margins under pressure and no major savings from reduction in interest costs, we expect earnings to decline for the sector,” it said.

Hero Honda will announce its Q4 results on Thursday. Analysts forecast about 15% fall in Hero Honda's Q4 net profit to Rs 130 crore (Rs 1.3 billion) on a 3% fall in sales to Rs 1,200 crore (Rs 12 billion). Bajaj Auto is expected to report a 14% fall in net profit to Rs 125 crore (Rs 10.6 billion) on 8% growth in sales to Rs 1,060 crore (Rs 10.6 billion). TVS Motor is expected to post a 18% growth in net profit to Rs 28 crore on a equal 18% growth in sales to Rs 670 crore (Rs 6.7 billion).

Most bike majors witnessed a sharp slowdown in sales during March 2003, probably reflecting the impact of a poor monsoon. Rising cost of fuel, the eyeball-capturing Cricket World Cup and the ‘Holi' festival have been primary factors for the sharp decline in two-wheeler volumes. BAL's bike sales rose by 5.9% from a year ago to 74,031 units. TVS Motor has registered a marginal 1.8% rise in motorcycle sales to 55,659 units in March 2003, from 54,675 units in the year-ago month. Hero Honda reported a 14.6% fall in its bike sales in March 2003 to 1,15,722 motorcycles.

Analysts expect motorcycle sales to pick up from April 2003, with the beginning of the harvest season. It is also reckoned that the effect of increase in fuel prices, which has hit bike sales, may wane in two to three months.

However, the earlier phenomenal growth rates of the bike sector may not be seen in the coming years, given the fact that the bike segment has already captured a major portion of the volumes in the two-wheeler sector on the back of change in consumer preference in favour of motorcycles from scooters. The bike segment currently commands roughly 70% of the two-wheeler market.