Prabhudas Lilladher's research report on Hero Motocorp
HMCL’s Q1FY21 performance was mixed with realizations beat at Rs52.7k/unit (PLe Rs48k/unit) offset by lower gross margins at 29.5% (PLe 32%). The management indicated sustenance of current demand momentum led by rural as well as shift towards personal mobility. With increased focus on cost control measures such as LEAP 2 (target savings of 100bp v/s LEAP 1 saving of ~50bp) in addition to recovering volumes, HMCL is better placed among other mass market 2Ws OEMs. We raise FY21/22/23 EPS by 3-6% to factor in cost benefits and price increase.
Outlook
We maintain ‘Accumulate’ with a price target of Rs3,044 (earlier Rs2,855) based on 15x (unchanged) roll forwarded to Sep’22 EPS and Rs168 value for Hero FiinCorp at 20% Holdco.
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