Shares of Hero MotoCorp traded lower by almost 2 percent in the morning session on February 8, a day after the company declared its December quarter earnings.
The country's largest two-wheeler maker's revenue from operations during the quarter stood at Rs 8,031 crore, as compared to Rs 7,883 crore during Q3 FY22, witnessing an uptick of 1.8 percent.
According to a poll of brokerages conducted by Moneycontrol, standalone revenue from operations for Q3 was expected to come in at Rs 8,033 crore, up 2 percent on-year. Standalone profit after tax (PAT) was seen at Rs 667 crore, down by 3 percent over last year.
The New Delhi-headquartered company has also declared an interim dividend of Rs 65 per equity share for 2022-23. Its earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter stood at Rs 924 crore.
At 10:28am, Hero Motocorp was quoting at Rs 2,613.20, down Rs 40.45, or 1.52 percent on BSE. It has touched an intraday high of Rs 2,684.15 and an intraday low of Rs 2,594.55. The scrip was trading with volumes of 23,857 shares, compared to its five day average of 11,630 shares, an increase of 105.14 percent.
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Global research firm Citi has a 'buy' rating with the target raised to Rs 3,300 per share, an upside of over 26 percent from current market price. The brokerage firm is of the view that Q3 numbers were ahead of estimates as gross margin surprised positively. The management noted revival in market share and further rise aided by new launches.
"Cost reduction initiatives should also aid margin growth. Volume sould see an uptick if rural demand revives due to better harvest of rabi crop," it added.
According to Jefferies, Hero Moto reported weak volumes but good gross margin expansion. The company's Q3 EBITDA fell 4 percent YoY (down 11 percent QoQ) but was 4 percent above estimates. Volumes fell 4 percent YoY (-13 percent QoQ) but ASP rose 2 percent QoQ.
The global research firm has a 'buy' on the stock with target of Rs 3,200 per share, an upside of 22 percent from current market price.
"Its gross margin expanded 250bp QoQ while gross profit per vehicle rose 11 percent QoQ to a new all-time high. EBITDA margin rose just 10bp QoQ, though to 11.5 percent, due to adverse operating leverage. EBITDA per vehicle was up 3 percent QoQ. Net profit rose 4 percent YoY and was 12 percent above estimates," Jefferies added.
With agency inputs
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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