Hero MotoCorp Q1 results: 30-40% surge in profit likely; sales to grow 6-7% on higher ASP

Hero MotoCorp is likely to clock a 30-40 per cent year-on-year (YoY) surge in year-on-year (YoY) net profit on a 6-7 per cent rise in sales, largely led by a rise in average selling price (ASP) for the quarter on price hikes, despite a fall in volumes. Analysts are mixed on Ebitda margin projections.

Emkay Global expects Hero MotoCorp to report 39.5 per cent YoY rise in profit at Rs 871.10 crore compared with Rs 624.50 crore in the same quarter last year. Revenue is seen rising 6.4 per ecnt YoY to Rs 8,930 crore from Rs 8,393 crore in the year-ago quarter. Revenue may grow YoY despite a fall in volumes (down 3 per cent YoY), thanks to better realisations.

"Realisations are likely to increase QoQ, led by price hikes, with Ebitda margin expected to improve due to higher volumes (up 6.5 per cent QoQ)," Emkay said while suggesting margin figure at 13.5 per cent.

Kotak Institutional Equities expect revenues to increase 7 per cent YoY led by a 10 per cent YoY increase in average selling price (ASP) due to price increases and a richer product mix. This is despite a 3 per cent YoY decline in volumes amid a continued weakness in entry-level motorcycle segment demand.

"We expect Ebitda margin to decline 50 bps QoQ to 12.6 per cent mainly driven by marginal decline in gross margins due to raw material headwinds and higher other expenses on account of newer launches," it said. This brokerage sees profit print at Rs 875.90 crore, up 40.3 per cent. Kotak sees sales rising 7 per cent YoY to Rs 8,976 crore.

Elara Securities pegs profit at Rs 819.90 crore, up 31.3 per cent. It sees sales rising 6.4 per cent YoY to Rs 8,931.90 crore.

"We expect the company’s revenue to grow 7.5 per cent YoY/8.6 per cent QoQ, led by higher volume and better ASP. We expect Ebitda margin to expand by 40 bps QoQ and 220 bps YoY on the back of improved operating leverage and price hikes," Nirmal Bang said.

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