Q3FY23 Preview: Hero Motocorp: Revenue seen at Rs 79,716 million, PAT at Rs 6,875 million

6 Feb 2023 , 10:19 AM

Result date: 7^th February, 2023

Recommendation: Buy 

Target price: Rs 3,185

Hero Motocorp witnessed decline in sales volumes, both sequentially as well as over the year-ago quarter. Price hikes could offset some of this pressure. Revenue could grow 1.1% over the year-ago quarter even though sequentially it could fall ~12%.

Analysts at IIFL Capital Services expect the company’s EBITDA margin to come in at 11.8%. Sequentially, this metric could witness minor uptick as benefits from lower commodity prices, price hikes offset pressures from negative operating leverage.

The company is likely to post flattish Profit After Tax (PAT) during the quarter.

Important management insights to watch out for:

• Outlook on demand across markets
• Pricing action and margin drivers

	December 2022 estimates	YoY change	QoQ change
Volumes	1,239,693	(4.1)%	(13.2)%
Revenue (Rs mn)	79,716	1.1%	(12.2)%
EBITDA (Rs mn)	9,395	(2.1)%	(9.5)%
EBITDA margin	11.8%	(39) bps	34 bps
Profit After Tax (Rs mn)	6,875	0.2%	(4.0)%

Source: IIFL Research