Q1FY23 Preview: Hero Motocorp: Revenue seen at Rs85,222 million, PAT at Rs7,728 million

11 Aug 2022 , 07:56 AM

Result date: 12^th 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:

• Demand trends across rural and urban markets
• Outlook on input costs, pricing action and margins

	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