Hero MotoCorp, the country's largest two-wheeler maker, is expected to register more than 35 percent year-over-year (YoY) growth in topline and bottomline for the quarter ended March 2021, with double digit growth in volume and realization.
The stock price corrected 10.3 percent in the current year 2021, to close at Rs 2,788.2 on May 5.
It had rallied 41 percent last year amid improved demand, after lockdown measures were eased from the second half of 2020, though sales were hit in April 2021 due to pandemic-imposed restrictions to control the spread of Second COVID wave.
"We expect revenues to increase by 35 percent YoY in Q4FY21 led by 18 percent YoY increase in volumes and 17 percent YoY increase in average selling prices due to BS-VI transition and price increase taken to offset input cost increases," said Kotak Institutional Equities, which sees 37 percent YoY growth in profit.
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Hero sold 15.68 lakh units in the quarter of January-March 2021, against 13.35 lakh units sold in the year-ago quarter, and 18.45 lakh units in the previous quarter.
Prabhudas Lilladher also said that with volume increase of around 18 percent YoY, down 15 percent quarter-on-quarter (QoQ) and realization increase of around 17 percent YoY on account of the price hike (around 1.5-2 percent) and product mix, the revenue could increase 37 percent YoY (down 13 percent QoQ).
At the operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) could grow more than 60 percent with triple digit expansion in margin YoY for the quarter.
"Operating margin is expected to improve 200 basis points (BPS) YoY at 12.6 percent as higher raw material to offset, by operating leverage benefits," said Prabhudas Lilladher, which saw a 63 percent jump in EBITDA.
Kotak expects EBITDA to increase by 68 percent YoY, led by operating leverage benefits in Q4FY21. "Overall, we expect gross margin to decline by 230 BPS YoY led by input cost pressures in Q4FY21," the brokerage said.