Hero MotoCorp - Q1FY21 Result Update - ICICI Securities

Hero MotoCorp (HMCL) reported strong Q1FY21 results. Total 2-W sales volume for the quarter came in at 5.6 lakh units, down 69.4% YoY. Consequent net sales were at Rs. 2,972 crore, down 63% YoY, tracking ~12.8% sequential rise in blended ASPs to Rs. 52,741/unit. EBITDA in Q1FY21 was at Rs. 108 crore, down 90.7% YoY with corresponding EBITDA margins at 3.6%. Margin performance was encouraging considering mere 25% capacity utilisation during the quarter. HMCL said that ex-fixed costs incurred during lockdown, margins were at 12% levels. Consequent PAT came in at Rs. 61.3 crore for the quarter.

Valuation & Outlook

For HMCL we build 8.3% sales CAGR, flattish volume CAGR in FY20-22E. HMCL's dominant presence in rural geographies (~50% of sales) and market leadership in domestic motorcycle segment places in a sweet spot to capture post Covid consumer trends, in our view. Hence, we upgrade it to BUY, valuing the company at Rs. 3,235 (20x P/E on FY22E EPS of Rs. 161.8). We believe market share gains, positive demand outlook and strong financials merit higher multiples than peers.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HeroMotoCorp_Q1FY21.pdf

Shares of HERO MOTOCORP LTD. was last trading in BSE at Rs.2805.45 as compared to the previous close of Rs. 2811.25. The total number of shares traded during the day was 95452 in over 8200 trades.

The stock hit an intraday high of Rs. 2841 and intraday low of 2757.65. The net turnover during the day was Rs. 267018920.

Source : Equity Bulls

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