Hero MotoCorp (HMCL) below estimates all front in Q1FY22. Weak realizations, Ebitda and Ebitda margins are below estimates. •Standalone revenue from operations grew by 84.7% YoY/-36.8% QoQ stood at INR 54,871 Mn in Q1 FY22 against our estimate of INR 57,945 Mn. Gross margin of the company decreased by 200bps YoY/-210bps QoQ at 27.5% due to commodity cost pressure. EBITDA grew by 376.5%YoY/-57.5QoQ to INR 5,148 Mn against our estimate of INR 6,793 Mn. EBITDA margin expanded by 575bps YoY/-456 QoQ to 9.4% Q1FY22 vs our estimate of 11.7%. The Company reported net Profit of INR 3,654 Mn in Q1FY22 against our estimate of INR 4,943 Mn. The total volumes (Motorcycles + Scooters) grew by 81.3% YoY to 10,24,489 units. The blended realization has seen an increase of 1.8% YoY/-3.3% QoQ to INR 53,559 unit on account of better product mix.
OutlookWe value Hero MotoCorp at PE of 16x to its FY23E EPS estimate of INR ~197, which yields a target price of INR 3,156. We assign an Accumulate rating on the stock.
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