Hero MotoCorp Ltd's Q1FY20 standalone Adj. profit declines 18.5% yoy to Rs741.1cr : Misses Estimates

The company’s standalone revenue stood at Rs8,030.3cr, down 8.8% yoy but up 1.8% qoq.

July 30, 2019 6:29 IST | India Infoline Research Team

Hero MotoCorp Ltd Q1FY20

Standalone Results Q1FY20: (Rs. in cr)

Q1FY20 YoY (%)
Revenue 8,030.3 [8.8]
EBITDA 1,158 [15.9]
EBITDA Margin (%) 14.4 [121]
Net Profit (adjusted) 741.1 [18.5]
***EBITDA margin change is bps
Hero MotoCorp Ltd (HMCL) reported weak set of numbers, with revenue and EBITDA in-line with estimates, however, Adj. PAT was a miss. The company's standalone revenue in the quarter declined by 8.8% yoy at Rs8,030.3cr on account of 12.5% yoy decline in two wheelers sales volume. Negative operating leverage led to EBITDA decline of 15.9% yoy to Rs1,158cr with EBITDA margin contraction of 121bps yoy to 14.4%. Due to extraordinary item of Rs737.5cr (reversal of provision), reported PAT stood at 1,257.3cr. However, adjusting for the extraordinary item, Adj. PAT stood at Rs741cr (adjusting for tax), lower 18.5% yoy and against estimate of Rs825cr.
  • Company reported 12.5% yoy volume decline for the quarter amidst a sluggish demand scenario. Number of 2W sold stood at 1,842,920 units for Q1FY20. The realisation (calculated) was up 4.2% yoy to Rs43,574/unit (down 1.6% qoq).
  • Pursuant to favorable order from the Supreme Court, the provision for National Calamity contingent Duty (NCCD) for Haridwar plant has been reversed during the quarter as exceptional item of Rs737.48 cr.
  • During the quarter company demonstrated its strong focus on premium motorcycle segment by launching three next-gen motorcycles for markets around the world (including India) - XPulse 200, XPulse 200T and Xtreme 200S.
  • It also introduced Maestro Edge 125 and in the scooter segment.
  • Hero MotoCorp became the first two-wheeler manufacturer in the country to receive BS-VI certification (in April 2020).
  • Company appointed Yerry Mina, the popular Colombian footballer as its new Brand Ambassador, during the quarter.
  • The company indicated that the demand outlook for the rest of the year will be dependent on multiple factors, including the progress of monsoon and festive season offtake, as well as improvement in liquidity. It also reiterated its appeal to the government to bring down the GST on two-wheelers to 18% from the current level of 28% to spur the demand.

Technical View:

Hero MotoCorp Ltd ended at Rs. 2,259.35, down by 144.4 points or 6.01% from its previous closing of Rs. 2,403.75 on the BSE.
The scrip opened at Rs. 2,400 and touched a high and low of Rs. 2,416.25 and Rs. 2,246.10 respectively. A total of 16,52,236 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.

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