Fundamental Result Update

HEROMOTOCO Q1FY20 Result Update



Hero Motocorp (HMCL) results were slightly below our est as net sales stood at Rs 80.3bn (-8.8% YoY) vs our est of Rs 82.3bn. Revenues were cushioned by 4% YoY increase in realizations at 43.5k/unit on account of the price hikes taken to offset the safety related costs. Gross margins at 30.4% (+34bps YoY/ -66bps QoQ) were supported by stable commodity prices and improved product mix. The scooter sales have seen strong growth in the 125cc segment where HMCL has been able to plug the gaps with the Destini 125cc which is further supported by the all new Maestro edge 125cc and refreshed Pleasure 110cc. The EBITDA margin was 14.4% (-121bps YoY / +86bps QoQ) vs our est of 13.6%. Margin was impacted by higher staff costs (+13% YoY) which was mainly on account of the staff expansion in AP plant. Reported PAT stood at Rs 12.6bn on account of reversal of the provisions made towards NCCD. Adjusted PAT stood at Rs 7.6bn (-16.1% YoY / +4.4% QoQ). On the concall, the management highlighted that near term demand has seen some signs of improvement on the retail side and the management is confident of a stronger show in H2FY20 vs the H1 led by inventory de-stocking around the festive season.


Tags: FundamentalResult Update


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