Hero MotoCorp Q3 Results Review - Underlying ICE Margins Continues To Be Healthy: Yes Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Yes Securities Report.Hero MotoCorp Ltd.’s Q3 FY24 reported results were in-line with our/street estimates as Ebitda margins expanded 250 basis points YoY (-10 bp QoQ) at 14%. However, underlying ICE margins were healthy at 16% (versus ~15% QoQ and ~12.2% YoY), supported by higher spare sales (SPAM) at Rs 14.6 billion (versus Rs 13.5 billion in Q2 and Rs 12.2 billion in Q1). Gross margins surprised at 32.7% (+210 bp YoY/ +130 bp QoQ), was partially offset by higher other expense at Rs 12.1 billion (+11% QoQ, estimate Rs 11.2 billion) due to increased festive advertising and promotion spends. The management indicated lead demand indicators from the rural remain positive with,higher contribution (more than 3%) versus urban andimproving inquiry mix from 40-45% two-three quarters back to 50-55% currently..Going ahead while the management remain hopeful of broad-based volumes recovery within two-wheelers, Hero MotoCorp is aiming at market share expansion led by new product launches. The key strategic focus post leadership changes such as margins recovery and premium focus seems to be on-track while the meaningful ramp-up in scooters/exports yet to kick in. The intended new product launches in the scooter (125cc and 160cc) Should help improve positioning and market share gains. However, customer response to recent product launches (especially for Xtreme 125R) would be the key catalyst to watch for. Maintain 'Add' with revised target price of Rs 5,577 (versus Rs 5,021) based on ~20 times March-26 standalone EPS plus Rs 133 for Hero FinCorp. We have raised FY25E/26E EPS by 2.4%/5.5% to factor in healthy ICE margins. Management’s action to overhaul brand strategy supported by Ather’s continued brand acceptance provide an additional lever for the stock. We build in revenue/Ebitda/adjusted profit after tax compound annual growth rate of 10.7%/15.1%/13.7% over FY24-26E..Click on the attachment to read the full report:.Hero MotoCorp Q3 Results: Profit Surges 51% On Higher Sales.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Hero MotoCorp Q3 Results Review - Underlying ICE Margins Continues To Be Healthy: Yes Securities

Going ahead while the management remain hopeful of broad-based volumes recovery within two-wheelers, Hero MotoCorp is aiming at market share expansion led by new product launches.

Choose a plan