World’s largest two-wheeler company Hero MotoCorp is likely to report robust Q4 financial results, buoyed by strong volume growth, a rich product mix, softening commodity costs, and higher average selling price (ASP). The company is due to announce its fiscal fourth-quarter financial results on May 8.
The Harley-Davidson maker is expected to see its January-March net profit rise to Rs 1,024 crore, up 20 percent from the year-ago period, according to a Moneycontrol poll of nine brokerage estimates. Revenue from operations is expected to jump 13 percent to Rs 9,383 crore.
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"Revenue is estimated to rise due to the increase in volumes, higher ASPs due to price hikes taken during the year, premiumisation trend, and recovery in entry-level motorcycles," Axis Securities said in a recent note.
EBITDA is expected to expand 23 percent on-year to Rs 1,330 crore. EBITDA is earnings before interest, tax, depreciation, and amortisation. The impressive EBITDA growth would be led by a favourable product mix and moderating raw material inflation, though partially offset by negative operating leverage.
On volumes, Delhi-headquartered Hero MotoCorp is estimated to have sold 13.92 lakh units during the quarter, up 10 percent year-on-year. In April, the company sold 5.34 lakh motorcycles and scooters. This translates into robust 34.7 percent growth over the corresponding month of the previous fiscal.
The company has commenced the deliveries of its premium street bike Maverick 440, which is pitted against a Harley-Davidson model. The company unveiled the Maverick 440 at its Centre of Innovation and Technology (CIT) in Jaipur in January along with the launch of two new bikes, the Xtreme 125R and a special collector's edition named 'Hero Forever'.
Going forward, it remains to be seen how the management responds to the challenge from the EV (electric vehicles) industry. “High 2W household penetration (especially in urban regions), sharp price hikes over the past few years, and EV disruption have structurally weakened Hero's ICE 2W industry's revenue growth outlook, in our view," BNP Paribas' Kumar Rakesh said.
He also said that the company's core segment is at the highest risk from EV disruption and industry premiumization among its peers.
At about 2:20 pm, shares of Hero MotoCorp were trading at Rs 4,482, down 0.6 percent from the previous close. The share price has slipped 6 percent in the last three months.
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