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Indian two-wheeler maker TVS Motor reported a larger-than-expected third-quarter profit on Wednesday, driven by strong demand in the festive season.

Indian consumers tend to splurge during the festival season, regarded as an auspicious time for significant purchases such as cars, two-wheelers and electronic goods, when companies offer attractive promotional discounts.

This festive period, which usually begins in September, was delayed to October-November in 2023, leading to a 25% jump in TVS' sales to 1.1 million units.

The Apache bike-maker's profit surged 68% from the previous year to 5.93 billion rupees ($71.4 million) in the three months ended Dec. 31, beating analysts' average estimate of 5.37 billion rupees, per LSEG data.

Sales of motorcycles jumped about 20%, accounting for nearly half of the total business, while sales of less-expensive scooters surged 36.5%, boosting TVS' revenue by 26% to 82.45 billion rupees.

Still, expenses rose 24%, led by a nearly 17% increase in input costs, with prices of steel, a key material for automakers, rising during the quarter.

Some automakers, including top carmaker Maruti Suzuki had flagged concerns about elevated steel prices and hiked prices of their vehicles to offset the costs.

Rival Bajaj Auto also posted better-than-estimated third-quarter profit earlier in the day, helped by strong domestic demand.

Hero MotoCorp, India's top motorcycle-maker by sales, and Royal Enfield-maker Eicher Motors will report their financial results next month.

TVS and its competitors had posted blowout September quarter earnings that propelled their stocks and the Nifty Auto index to record highs.

TVS' shares have gained roughly 24% since its second-quarter earnings, leading up to the results on the day.

($1 = 83.1010 Indian rupees)