Revenue seen at Rs 73,621 million, PAT at Rs 6,260 million

Result date: 3rd May 2022
Recommendation: buy
Target Price: Rs3,200

Hero Motocorp experienced a sharp decline in sales volume for the March 2022 quarter. Sales were down 24% from the prior year quarter and 8% sequentially. While price increases may offset some pressures from soaring input costs, they are unlikely to dampen revenues. The company’s revenue could decline by 15.2% compared to the year-ago quarter.

EBITDA margins could contract 195 basis points year-over-year to 12.0%, although improved spare parts revenue share could keep the sequential decline to 18 basis points base.

Weak revenues along with negative operating leverage could lead to a 27.6% decline in after-tax profit compared to the prior year quarter.

Important management information to monitor:

  • Demand outlook across all segments and markets
  • Update on plans to launch its own electric scooter
  • Production Cost Inflation Trends, Expected Pricing Action and Margin Levers

million rupees

March 2022 estimates

Annual change

QoQ change
Revenue 73,621 (15.2)% (6.6)%
EBITDA 8,832 (27.1)% (8.0)%
Profit after tax 6,260 (27.6)% (8.8)%

Source: IIFL Research

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