Hero MotoCorp Q4 Review - Attractive Valuation; Risk Reward Favorable: Reliance Securities

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Reliance Securities Report

Hero MotoCorp Ltd. reported subdued performance in Q4 FY22 with lower Ebitda margin of 11.2% as against our estimate of 12.5%.

Revenue decreased by 15% YoY/6% QoQ to Rs 74.2 billion (in-line with our estimate of Rs 74.1 billion), on the back of a volume de-growth of 24%YoY/8%QoQ and a 13% YoY improvement in average realisation due to price hikes and higher non-vehicular sales.

Its Ebitda margin contracted by 279 basis points YoY to 11.2% while Ebitda decreased by 32% YoY to Rs 8.3 billion (10.5% below our estimate of Rs 9.2 billion) due to higher other expenses.

Hero MotoCorp's profit after tax came in at Rs 6.3 billion, 6% below our estimate of Rs 6.7 billion due to lower operating margins, while lower tax rate (tax credit of Rs 375 million) boosted its profit after tax.

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