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What should investors do with Hero MotoCorp shares post Q4 results?

What should investors do with Hero MotoCorp shares post Q4 results?

The country's largest two-wheeler maker had reported a profit of Rs 885 crore in the January-March quarter of 2020-21 fiscal.

Hero MotoCorp shares Hero MotoCorp shares

Shares of Hero MotoCorp are in focus as the company reported its earnings for the quarter ended March 2022. Hero MotoCorp said its consolidated profit after tax (PAT) declined by 30 per cent to Rs 621 crore for the quarter ended March 2022 on account of lower sales.

The country's largest two-wheeler maker had reported a profit of Rs 885 crore in the January-March quarter of 2020-21 fiscal.

Revenue from operations declined to Rs 7,497 crore as against Rs 8,690 crore in the fourth quarter of FY21, Hero MotoCorp said in a regulatory filing.

On Thursday, the scrip closed 3.83 per cent higher at Rs 2,502.10 against the previous close of Rs 2,409.90. The market cap of the firm rose to Rs 49,994.95 crore.

Reliance Securities expects HMCL’s domestic volume to witness a growth of 7 per cent in FY23E.  It believes that the better product mix, regular price hike coupled with likely revival in the 2W industry would support HMCL’s margin expansion, going forward.

"In view of likely rural revival, focus on the premium segment, HMCL’s market position to capitalise on the demand recovery, foray into E-2W and attractive valuation at 12.5x FY24E, we reiterate our BUY recommendation on HMCL with revised Target Price of Rs 2,900, valuing the stock at an unrevised P/E multiple of 15x FY24E EPS," it added.

IDBI Capital said Hero Motocorp (HMCL) Q4FY22 results were below the expectations on all counts due to lower sales and operating profits. 

Going forward, the management remains positive on the volume growth front due to rural economy pick up, opening up of all the sectors of the economy in urban and semi urban areas and under-penetration of 2W’s in India.

"The company plans to launch its first EV product in July 2022 and has lined up investments and new product launches over next few years. To factor in the changing business environment and commodity price inflation, we have revised our Volume and PAT estimates downwards by 15.8 per cent/14.8 per cent and 16.9 per cent/15.2 per cent for FY23 and FY24 respectively. We rate the stock as 'Buy' with revised price target of Rs 2,872," the brokerage firm said.

"Hero MotoCorp’s (HMCL) 4QFY22 operating performance fell 7 per cent short of consensus and our estimates, with high other expenses more than offsetting the expansion in gross margin. The company lost 260 bps market share YoY in FY22," Systematix said.

"We have cut our FY23/24E EBITDA by 10 per cent/5 per cent, respectively, to factor in commodity inflation, but believe the improvement in domestic 2W demand and successful EV launches could drive a re-rating in the near term. We have a 'Buy' rating, with a target price of Rs 2,750 (10x FY24E EV/EBITDA)," it added.

Also read: What should investors do with Tata Steel shares post Q4 results? 

Also read: Here's what brokerages have to say about Kotak Mahindra Bank post Q4 results 

Published on: May 06, 2022, 7:15 AM IST
Posted by: anwesha madhukalya, May 06, 2022, 7:07 AM IST