Hero MotoCorp share price gained 1.5 percent in the early trade on November 15 after company announced its September quarter numbers in the last week.
Hero MotoCorp on Friday reported a standalone profit after tax (PAT) of Rs 794 crore, down 17 percent from a PAT of Rs 953 crore in the corresponding quarter last year. On a sequential basis, however, its standalone PAT jumped 117 percent from Rs 365 crore in the last quarter.
Standalone revenues at Rs 8,453.4 crore declined 10 percent from Rs 9,367 crore recorded in the corresponding quarter last year. Standalone revenues are higher by 54 percent from Rs 5,487 crore reported in the preceding quarter.
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Here is what brokerages have to say about the stock and the company after its September quarter earnings:
Nomura
The broking house has kept ‘neutral’ rating on the stock with a target price at Rs 2,981 per share.
The demand for mass segments like two-wheelers can face pressure, it said.
Kotak Institutional Equities
The research house has maintained ‘reduce’ rating with a target at Rs 2,800.
The company’s EBITDA was above estimate on better-than-expected gross margin and higher ASPs. The company expects to maintain its profitability going into FY23 and gradual recovery in domestic two-wheeler volumes, it said.
The weaker presence in scooter, premium motorcycle and exports are the concerns, it pointed out.
Jefferies
The research firm has maintained the ‘hold’ rating with a target at Rs 3,000 after company’s Q2 EBITDA/profit declined 17 percent YoY on lower volumes.
It has reported near-all-time-high gross profit and EBITDA on a per-vehicle basis. The price hikes and internal cost controls help offset the input cost pressures.
Jefferies expect a gradual revival from an abnormal cyclical trough.
Prabhudas Lilladher
“We believe company will benefit in medium to long-term with (1) focus on increasing export penetration, (2) improvement in rural sentiments driving demand for entry segment models and (3) further savings to be achieved through cost savings programmes,” the brokerage said.
However, success in EVs remains main concern for the company and a key factor to monitor, it said.
“We have tweaked our estimates upwards by 7 percent /10 percent for FY23/24 to factor in strong 2QFY22 performance and maintain ‘buy’ with a target price of Rs 3,115 at 15x Sep23E EPS (Earlier 17x) to factor in risk of EVs,” it said.
Motilal Oswal
Hero MotoCorp is a good proxy on the rural market recovery, with a stronghold in the 100cc Motorcycle segment. It has a low vulnerability to EVs as it gets just 8 percent of volumes from Scooters – the core 100cc motorcycle business is less prone to the EV disruption.
The stock trades at 17.1x/13.7x FY22E/FY23E EPS. “Maintain ‘buy’ with target price of Rs 3,100,” it said.
At 9:16am, Hero Motocorp was quoting at Rs 2,722.60, up Rs 39.55, or 1.47 percent, on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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