Hero MotoCorp Q3 results today: share price touches 52-week highs, Should you Buy, Sell or Hold the stock?

The investor sentiments on Hero MotoCorp remain upbeat after strong festival season sales seen by the two-wheeler manufacturers during the festive season. As channel inventories reduced in November, the pick up in wedding season sales thereafter further lifted wholesale volumes of manufacturers as Hero MotoCorp. The recovery in rural demand also bodes well for Hero MotoCorp’s range of entry level motorcycle sales.

Analysts at Motilal Oswal Financial Services in their Q3 preview report said that, we are already witnessing a reversal in demand patterns, especially in the two wheelers, wherein we anticipate a high growth potential. As compared to other categories, two wheelers have a relatively better scope for growth over FY23-26. Hero MotoCorp remains their top pick in the space.

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For Hero MotoCorp volumes grew 18% year on year due to healthy recovery in the domestic market.  The  discounts during the festival season however were high during the festive season and hence some analysts expect softness in realizations growth during the quarter, though some price hikes were also taken by Hero MotoCorp  during the quarter.

Goldman Sachs analysts in their Q3 report said that, we update our model for higher than expected volume sequentially, ongoing benign raw material prices, price hikes taken in December quarter (only notable company in two wheeler to push through price hikes in 3Q24) and company’s push into higher average selling price motorcycling segments, and quarterly roll forward.

Hero MotoCorp revenues at ₹9445.4 crore are pegged to grow 23% y-o-y and 4.4% sequentially as per Goldman Sachs estimates.  Earnings before interest tax deprecation and amortisation as ₹1328.3 crore are expected to rise 63% y-o-y leading net profit growth of 63% y-o-y to ₹1053.8 crore, as per Goldman Sachs estimates.

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Analysts at MOFSL on the other hand expect adjusted net profit at ₹1039 Crore growing 46.2% year-on-year. They expect Ebitda of ₹1342 crore being reported by Hero MotoCorp against ₹942 crore in the year ago quarter. Margins at 13.9% though will improve from 11.5% (up 240 bps) in the year-ago quarter, nevertheless will may soften by 20bp sequentially

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 09 Feb 2024, 02:32 PM IST