Hero Results: Hero MotoCorp Quarterly Results for Q1 (2021) Earnings & News

Hero Results: Hero MotoCorp Quarterly Results for Q1 (2021) Earnings & News

Last updated: 13 Aug, 2021 | 10:23 am

Hero Results: Hero MotoCorp Quarterly Results for Q1 (2021) Earnings & News

Revenue and Profit miss estimates: Hero MotoCorp has reported a standalone net profit of Rs 365 crore for the Apr-Jun quarter, up by a massive 498% when compared with a meagre Rs 61 crore in the same period last year. However, the profit fell 58% on a sequential basis from Rs 864 crore in the March quarter. Analysts had expected a net profit of Rs 463 crore. Revenue from operations came in at Rs 5,487 crore in the reporting quarter, up 85% from Rs 2,971 crore in the year-ago period. Sequentially profits fell by 37%. Analysts had expected it to be around Rs 5,847 crore. The numbers are higher as compared to the previous year due to a lower base (impacted by lockdowns in Apr-Jun 20).

Operating Margins: The EBITDA for the quarter stood at Rs 515 crore as compared to Rs 108 crore last year period, translating to 9.4% EBITDA margin and a growth of 376%. However, sequentially the EBITDA nearly fell 57% and the margins dropped 4.5% from 13.9% last quarter. Commodity costs continued to rise, and are impacting the industry margins.

Sales Volume: The company sold 10.25 lakh units of motorcycles and scooters in the quarter ended June, a growth of 81% from the last year. However the sales dropped 35% sequentially because local lockdowns stalled production and shut dealerships in most parts of the country. High cost of ownership due to costly fuel, a series of price hikes prior to the pandemic and then again to counter the surge in commodity costs, too, weighed on the sales.

Hero MotoCorp Q1: Important highlights

Hero MotoCorp Q1 Results Review:

Hero MotoCorp has reported Q1 earnings below street estimates because of Covid-19 induced  disruptions. Nearly half of the Apr-Jun 21 quarter witnessed significant disruptions triggered by localised lockdowns, thereby restricting movement of logistics and dampening customer sentiments. The strong growth in net profit and sales on a yearly basis was aided by a depressed base in the year-ago quarter, which was impacted by the national lockdown due to covid-19 pandemic. The company, however, remains optimistic about demand over the coming months. With the start of the festive season, a healthy monsoon, encouraging farm activity the company expects numbers to improve going forward. The company improved its market share by more than 200 bps over the last year.

Brokerages View:

Hero MotoCorp Ltd. missed analysts’ estimates in the quarter ended June as commodity costs rose and sales declined amid local lockdowns to curb the second Covid-19 wave. ICICI Securities said the company was witnessing demand pressures in the entry-level segment due to weak consumer sentiment, and rising vehicle prices further hit profitability. The company’s multi-pronged strategy (Ather/Gogoro) bodes well for its future product launches. ICICI Securities maintained an ‘Add’ rating with target price of Rs 2,965. Motilal Oswal has also maintained a ‘Buy’ rating with a target price of Rs 2,513.

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