Hero MotoCorp Q1 Preview: PAT may surge 42% YoY; price hikes to aid sales growth

economictimes.indiatimes.com:

Hero MotoCorp is expected to report year-on-year growth in revenue for the quarter ended June despite a drop in volumes, primarily due to price hikes undertaken by the company. Higher prices and a richer product mix are likely to aid the operational performance of the company. The country’s largest two-wheeler maker is likely to report a 42% year-on-year (YoY) rise in net profit for the quarter ended June to Rs 887 crore, according to the average of estimates given by 13 brokerages.

Revenue from operations is anticipated at Rs 8,915.5 crore — a rise of 6.2% YoY. Sequentially, the topline is expected to grow 7.3% and the bottomline by 3.3%. The Pawan Munjal-owned company is slated to release its quarterly earnings on Thursday.

In the June quarter, total vehicle sales declined 3% YoY, but grew 7% sequentially. Domestic sales were marginally down by 0.8% on a YoY basis while exports slumped 43%. Here’s a summary of analysts’ earnings expectations from the automaker:Prabhudas LilladherIt expects revenue growth of 8% QoQ, led by higher volumes of 6.5% and increase in realization.

Hero Motocorp’s EBITDA margin at 12.7% (-40 bps QoQ) will be lower due to higher input cost, de-inventorisation.Nomura Financial AdvisoryThe analysts expect revenues to increase 4% YoY, benefitting from 7% higher average selling price (-1% QoQ) offset by 3% YoY decline in volumes. EBITDA margin is predicted to improve 80 bps QoQ on price hikes.Emkay Global FinancialRevenue is expected to grow YoY despite lower volumes (-3% YoY) on better realizations. Realizations are likely to increase QoQ, led by price hikes, with EBITDA margin expected to improve due to higher volumes (+6.5% QoQ).PhillipCapitalRevenue to grow 7% YoY on realisation growth of 10%