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India's Hero MotoCorp, the world's largest two-wheeler maker by sales, reported a bigger-than-expected quarterly profit on Tuesday, as price hikes offset a dip in demand.

The company said its profit came in at 7.11 billion rupees ($85.96 million) for the three months ended Dec. 31, a year-on-year increase of 3.6%.

Analysts, on an average, had expected a profit of 6.60 billion rupees, according to Refinitiv IBES data.

The industry was hit by high raw material costs and supply chain disruptions since the onset of the pandemic, and to mitigate the inflationary squeeze, two-wheeler makers raised vehicle prices since last year, passing the cost burden to customers.

Hero MotoCorp has hiked vehicle prices four times so far in the current fiscal year.

Revenue from operations rose nearly 2% to 80.31 billion rupees on price hikes, even as sales in the quarter fell to 1.24 million units from 1.29 million units, a year ago.

Analysts now expect Indian two-wheeler makers to book margin benefits in the coming quarters, as prices of commodities are easing off their highs.

Hero MotoCorp's input costs in the quarter rose a modest 1.4%.

The company has started recovering market shares and is expected to grow further, with new launches lined up over the next few quarters, especially in the premium segment, Chief Financial Officer Niranjan Gupta said in a statement.

He added that the company expected the two-wheeler industry to log a double-digit revenue growth in the financial year 2024.

Shares of the company settled 1.6% lower ahead of the results, while the Nifty auto index ended down 1%.

Last month, rivals Bajaj Auto and TVS Motor reported better-than-expected profit aided by price increases.

($1 = 82.7100 Indian rupees)