Hero Honda Motors Ltd has posted a 9.2 per cent drop in quarterly net profit as it faced rising costs and intense competition from rival Bajaj Auto Ltd.

The company's net profit stood at Rs 216 crore in the second quarter of the current year as against Rs 238 crore in the same period last year.

"The impact on operating margins has been due to increased inflationary costs in raw materials — steel, aluminium and rubber," the Managing Director, Mr Pawan Munjal, said in a statement. Operating margin fell to 12.7 per cent in July-September from 15.4 per cent in the year-ago quarter. Analysts added that apart from increased raw material costs, the discounts offered to push volumes and counter competition from rival bike makers have also hit margins.

Sales in the quarter rose 3.6 per cent to Rs 2,289 crore as compared to Rs 2,209 crore. The company sold 7,51,967 two-wheelers, including 21,703 scooters.

Close on the heels of the new CBZ X-treme hitting the roads, Hero Honda on Wednesday announced the launch of two new variants - the new Glamour and Passion Plus Limited Edition.

The stock closed at Rs 749.30 on BSE on Wednesday, down 0.69 per cent over the previous closing.