Hero MotoCorp Ltd. share price target

Hero Moto (HMCL) posted an operational beat in Q3FY20 led by healthy gross margins.

In the run up to the BS-VI changeover, pricing of products launched by 2-W OEMs thus far including HMCL have surprised us negatively. As against our expectation of ~10% price increase, actuals have tended to range between 13-15% on average. This, we believe, adds further pressure to a price sensitive market segment which is already suffering from subdued buyer sentiment given reduced propensity to spend and cost increase for safety features and upfront insurance. The domestic 2-W industry has registered 15.8% YoY 9MFY20 volume drop. While retail performance has improved in...

Hero MotoCorp's (Hero) Q2FY2020 results were broadly in line with our estimates. Hero managed to marginally improve its margins on a q-o-q basis, driven by cost-control initiatives and softening commodity prices. While management indicated marginal growth in retail sales during the festive season, it stated the same may not be sustainable. Management also stated that a sustained recovery would take more time. Moreover, due to higher inventory, wholesale would continue to remain negative even in the festive period. Steep...

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

Hero MotoCorp (HMCL) Q2FY20 EBITDA margin was higher than our and consensus estimates. EBITDA margin for the quarter stood at 14.5% vs our and consensus estimates of 13.5% and 13.7% respectively. We expect weaker consumer sentiment, higher inventory and competitive intensity to put pressure on HMCL's volume growth. We factor slowdown in H1FY20 and cut our FY20/21 volume estimates by 10% each.We cut our revenue/earnings estimates by 9%/11% for FY20E and 10%/10% for FY21E. We...

Maintain BUY as (1) Industry demand has improved after several quarters of decline (2) Hero has successfully defended market share in the 2W segment in the current downturn. (3) The stock is trading at attractive valuations of 16.1x on FY20E estimates and offers a dividend yield of ~3.2%. Co has healthy return ratios with an ROE of 24%. Key Risk: Sharper than expected increase in BSVI product prices. Heros 2QFY20 EBITDA margin was flat QoQ at 14.5% despite weak volumes. Co is witnessing a growth in retail sales in the festive season after several quarters of decline. Reiterate BUY, with a TP of Rs 3,460 (18x Sep-21 EPS).

24 October 2019 Revenue declined 16.7% YoY to higher spare sales. EBITDA declined ~20% YoY (-5% QoQ) to ~INR11b (our 13.4% due to lower RM cost, cost savings and lower-than-estimated variable market spend. PBT before EO item declined 24% YoY. PAT decline to ~6% (at INR9.2b versus our estimate of INR8.6b). (a) Festive season is building up well with low- single-digit growth in retails (after a 12% decline in the preceding six months). Even after Dussehra, there is no let-up but a build-up in momentum. However, it expects a sustained recovery to take some time. (b) Pick-up is prominent in rural and not in urban markets. (c) First indication of a rural recovery to be visible from the third week of November when Rabi sowing starts.

BS-VI transition to weigh on growth prospects! The domestic 2-W segment is poised at an interesting juncture. Existing channel inventory remains abnormally high (~60 days as per latest available FADA release) despite intensely competitive pricing environment during the ongoing festive period. The upcoming changeover to BS-VI emission controls from April 2020 complicates matters further. Soon, industry efforts would be concentrated towards de-stocking BS-IV vehicles and accelerating BS-VI model rollouts. The new norms would result in ~10% increase in 2-W...

estimates by 16%, while reported PAT stood at Rs8.7bn. We believe that current margin of 14.5% is commendable, despite negative operating leverage of 21% YoY, inventory correction, cost inflation for safety norms and overall competitive business environment. In view of expected rural revival in FY21E, company's strong market share position to capitalise demand...

Demand shows sequential improvement, corporate tax cuts to support earnings Better than expected numbers in Q2 Total net revenues in the quarter went down by 16.7% yoy and 5.7% qoq as volumes were...