11 Aug 2022 , 07:58 AM
Result date: 12th August, 2022
Recommendation: Buy
Target price: Rs3,530
Hero Motocorp could post strong growth in sales volumes both over the year-ago quarter and on a sequential basis, partly due to a low base (year-ago quarter) and inventory correction (in March 2022 quarter). This, coupled with price hikes could drive a 55.3% year-on-year growth in revenues.
EBITDA performance too will be solid on the back of price hikes, strong operating leverage and seasonal fall in marketing spends. This will be offset partly by increasing input cost inflation. Overall, EBITDA margin could come in at 12.5%, up 308 basis points over the year-ago quarter and 131 basis points sequentially.
Strength in revenue and EBITDA will translate to Profit After Tax (PAT) which could grow 111.5% over the year ago quarter.
Important management insights to watch out for:
June 2022 estimates | YoY change | QoQ change | |
Volumes | 1,390,192 | 35.7% | 16.9% |
Revenue (Rs mn) | 85,222 | 55.3% | 14.8% |
EBITDA (Rs mn) | 10,618 | 106.2% | 28.3% |
Profit After Tax (Rs mn) | 7,728 | 111.5% | 23.2% |
Source: IIFL Research
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