It has the best positioned portfolio, with HF Deluxe in the Economy segment, Splendor in Executive 100cc, and Super Splendor / Glamour in Executive 125cc, covering all the price points with multiple variants. With an apt product portfolio for the rural market, the highest brand value, and a strong distribution network, Hero is best placed to benefit from low penetration and ongoing momentum in the rural economy. HMCLs market share in Executive 100cc was at ~87% in FY20 (v/s 84% in FY19), and with the launch of the new Passion, it has gained further market share to 90% in FY21YTD. HMCLs market share declined by 700bp to ~51% in FY20 in the 125cc segment post the launch of the Bajaj Pulsar 125. However, post the launch of the new Super Splendor and Glamour, it regained market share by 225bps FY21YTD.

We continue to prefer Hero MotoCorp Ltd on the back of robust rural & semi urban demand, downtrading trend and preference for entry level motorcycles (Hero being the market leader), along with a shift in preference for Personal mobility.

We are initiating coverage on Hero Motocorp Ltd (Hero) with a BUY rating and a Target Price of Rs 3,450, which implies ~10% upside from the current levels.

Hero MotoCorp reports 92% drop in Q1 PAT, misses estimates On a consolidated basis, the two-wheeler maker's net profit tumbled 95.3% to Rs 59.14 crore on a 63.7% decline in net sales to Rs 2,969.08 crore in Q1 FY21 over Q1 FY20. EBITDA fell 90.7% to Rs 108 crore in Q1 June 2020 from Rs 1,158 crore in Q1 June 2019. EBITDA margin was at 3.6% as on 30 June 2020 as compared to 14.4% as on 30 June 2019. Profit before tax in the June quarter stood at Rs 79.49 crore, down by 95.8% from Rs 1873.83...

Retail sales have been consistently improving on m-o-m basis. Early August trends also indicate improvement over July levels. Inventory is lower than normalised levels and Hero is ramping up...

Hero MotoCorp (HMCL) is India's leading two-wheeler manufacturer in terms of unit volume sales in a calendar year. It holds nearly 50% of the market share in the Indian motorcycle market. The company has eight...

Hero MotoCorp (Hero) reported better-than-expected 1QFY21 net profit of Rs613mn, down 88% YoY, driven by better operating performance and lower tax expense. Reported EBITDA margin declined by 1080bps YoY to 3.6%. Lockdown period cost was Rs2.5bn. Adjusting for this, EBITDA margin was ~12%. Cash flow generated during 1QFY21 stood at over Rs10bn. As per the management, shift away from public transport and shared mobility towards personal mobility, strong recovery in rural and semi-urban markets and very good feedback on BS-VI products will be the key drivers of demand going forward. Leading indicators like eway bills and GST collections have reached ~85% of pre-covid level. Fertilizers & Tractor sales and kharif sowing data indicate strong rural recovery. Demand recovery, which started in June, hasn't seen a decline in July or August, which indicates that it is not just pent-up demand. Demand from bigger cities is still well...

Retail sales have been consistently improving on m-o-m basis. Early August trends also indicate improvement over July levels. Inventory is lower than normalised levels and Hero is ramping up...

While 1QFY21 PAT was weak at Rs 613mn (-90% YoY), the management highlighted that demand is back to pre-COVID level in 2QFY21. Hero has gained market share in the quarter, led by rising demand in rural/semi-urban markets and ramp-up in production. The OEM's foray into the premium segment has got off to an encouraging start, and it is targeting double-digit market share in it. We reiterate BUY (please see our recent note: 'Xtreme'...

14 August 2020 HMCL has posted a notable operating performance in these tough times. The narrative around rural demand is positive, but supply chain ramp-up and broad-base demand are important for demand sustainability. We upgrade our EPS estimate by 9% for FY21 to factor faster volume recovery. But, we maintain our Neutral rating, with TP of INR3,045 (~16x Sep22 S/A EPS + INR98/share for Hero FinCorp). Revenues fell 63% YoY to ~INR29.7b on a ~69% YoY decline (-58% QoQ) in volumes. Realizations increased 21% YoY (+12.8% QoQ) to INR52.7k (v/s est. of INR48.9k), driven by BS6-related price increases and no discounts. didnt load contribution margins on the BS6 cost pass-through. Lower other expenses supported EBITDA margins to 3.6% (v/s est.

Hero MotoCorp (HMCL) delivered a Q1FY21 revenue beat but disappointed on earnings due to lower operating efficiencies.

HMCL remains our preferred play in autos on domestic demand revival led by increasing preference towards personal mobility due to safety needs and pick up in rural volume. Strong product portfolio in entry and executive segments with more than 60% shares, deep rural/semirural network reach (rural contributes to 50% volume), and strong supply chain management are key positives. We recognize the company's efforts to increase its overall market share (+500bps YoY to 41.6%) in 2W space. The company preempted pent-up demand after lockdown and readies operations to meet the same. As supply situation is much better compared to its...

The momentum is expected to continue. Green shoots are clearly visible with operational performance, c) higher other income and d) exceptional gains of Rs760mn. 2HFY20 sustainability of return of demand. Hero's focus on fast filling white spaces (Premium + is expected to be better than 1HFY20 with reasonable growth in exports and presence of levers Scooters + Exports), along with rural uplift would result in outperformance as compared to the...

We have set a revised target price of Rs 3,100 at 19x Jun-22E EPS (at a 15% premium to its long-term average trading multiple, earlier 17x) to factor in improving capabilities at Hero. We believe that Hero's strategic initiatives would yield benefits in the medium term as: (1) The OEM is aggressively expanding in the premium segment, with the launch of the Xtreme 160cc. We expect Hero to gain 10% market share in this segment (negligible share currently); (2) The company has been scaling up its NBFC arm, which now funds ~15% of its 2Ws. This scale-up enhances finance availability through cycles; (3) The management is investing in new technologies (EVs/ride-sharing), which would make it ready for any future transition. We believe that Hero would gain an additional 150-200bps in market share (52% currently) in the motorbike segment with its initiatives, thus sustaining its market leadership. Further, the enhanced government focus on agriculture reforms would support demand as Hero derives ~50% sales from this segment.

Hero Motocorp (HMCL) in its FY20 annual report, throws light on certain key aspects with regards to Covid-19 induced near term uncertainty on its business operations as well change in key trends. On the other hand, certain optimism is displayed due to certain factors such as potential recovery in semi urban/rural areas, increasing preference towards personal mobility due to safety needs and pent up in underlying demand. As incomes are affected due to the pandemic, downgrading is being witnessed, which may push up growth in the entry-level bike segment,...

FY2020 was a challenging year for the two-wheeler (2W) industry, with volumes dropping by 18% y-o-y, impacted by increased cost of ownership, NBFC liquidity crisis, and lack of income growth. While the industry is facing short-term challenges on account of COVID-19, long-term growth factors are intact. Moreover, Hero MotoCorp (Hero) expects industry demand to recover as early as H2FY2021, driven by buoyancy in rural sentiments, pent-up demand, and preference for personal transport to ensure safety in post-COVID era. Hero's focus on...

Hero MotoCorp (HMCL) Q4FY20 EBITDA margin was lower than our and consensus estimates. EBITDA margin for the quarter stood at 10.6% vs our and consensus estimates of 12.2% and 11.6% respectively due to one-offs. We expect 2W industry to see a double digit decline in FY21 primarily driven by adverse impact of the COVID-19 outbreak on economic growth and discretionary spending. The challenges for the 2W segment are likely to get aggravated as consumer spending will be severely impacted by the outbreak resulting in lower spending power both in urban and rural markets. We believe HMCL being a major player in commuter segment could see muted sales. We...

Revenue from operations during the quarter under review stood at Rs 6,333.51 crore as against Rs 7953.10 crore in the same quarter a year ago. The company said it sold 1,323,000 twowheeler units during the quarter. OPM of the company stood at 10.63% compared to 13.97% in Q4FY19. As a result operating profits reported profit of Rs 673.25 crore compared to profit of Rs 1110.84 crore. Other income fell 19% to Rs 157.03 crore. Interest cost down by 11% to Rs 10.13 crore. Depreciation rose...

We reiterate Hero as our preferred pick in the auto sector. 4QFY20 Adj. EBITDA margins at 13.5% (flat YoY) were significantly ahead of our estimates. Hero has gained market share (+130bps) in FY20. We believe that the OEM is well placed in the current cycle due to its higher exposure to the rural segment/entry segment portfolio.

Hero MotoCorp reported weak performance during Q4FY20 with a 20.9% YoY fall in revenue to Rs 62,384 mn was impacted due to disruptions caused by covid-19 in late March. It had reported a revenue of Rs 78,850 mn in the corresponding quarter last year. Profit of the company declined by 15% YoY to Rs6207 mn in Q4FY20 while on a sequential basis profit fell by 29.50%.EBITDA stood at Rs 6599mn down by 38.3% YoY for the Q4FY20 as compared to Rs 10,693 mn for the Q4Y19. EBITDA margin narrowed to 10.6% in Q4FY20 as compared to 13.6% in Q4FY19. The two-wheeler major...