Arihant Capital’s research report on Hero MotoCorp
Hero MotoCorp (HMCL) below estimates all front in Q1FY22. Weak realizations, Ebitda and Ebitda margins are below estimates. •Standalone revenue from operations grew by 84.7% YoY/-36.8% QoQ stood at INR 54,871 Mn in Q1 FY22 against our estimate of INR 57,945 Mn. Gross margin of the company decreased by 200bps YoY/-210bps QoQ at 27.5% due to commodity cost pressure. EBITDA grew by 376.5%YoY/-57.5QoQ to INR 5,148 Mn against our estimate of INR 6,793 Mn. EBITDA margin expanded by 575bps YoY/-456 QoQ to 9.4% Q1FY22 vs our estimate of 11.7%. The Company reported net Profit of INR 3,654 Mn in Q1FY22 against our estimate of INR 4,943 Mn. The total volumes (Motorcycles + Scooters) grew by 81.3% YoY to 10,24,489 units. The blended realization has seen an increase of 1.8% YoY/-3.3% QoQ to INR 53,559 unit on account of better product mix.
We value Hero MotoCorp at PE of 16x to its FY23E EPS estimate of INR ~197, which yields a target price of INR 3,156. We assign an Accumulate rating on the stock.
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