Q1FY24 Preview: Hero Motocorp: Revenue seen at Rs. 87,992 million, PAT at Rs. 9,083 million

9 Aug 2023 , 10:12 AM

Result date: 10^th August, 2023

Recommendation: Add

Target price: Rs. 3,020

Hero Motocorp’s sales volumes were down 3% over the year-ago quarter (weakness in entry-level motorcycle segment demand), but grew 7% sequentially. This, coupled with increase in average selling prices and a richer product mix could drive 4.8% growth in revenue over the year-ago quarter and 5.9% on a sequential basis. 

Analysts at IIFL Capital Services, though, expect the company’s EBITDA margin to increase both relative to the year-ago quarter as well as sequentially. Key margin tailwinds (sequentially) include favorable operating leverage and seasonal fall in marketing spend.

The company’s Profit After Tax or PAT could grow 45.4% over the year-ago quarter and 5.7% sequentially.

Important management insights to watch out for:

• Demand trends across key markets
• Outlook on pricing, input costs and margins

	June 2023 estimates	YoY change	QoQ change
Volumes	1,352,574	(2.7)%	6.5%
Revenue (Rs. mn)	87,992	4.8%	5.9%
EBITDA (Rs. mn)	12,155	29.2%	12.2%
EBITDA margin	13.8%	260 bps	78 bps
Profit After Tax (Rs. mn)	9,083	45.4%	5.7%

Source: IIFL Research