Hero MotoCorp Ltd. share price target

Hero Motocorps (HMCL) 4QFY15 APAT was largely inline with consensus estimates. While gross margin saw solid 150 bps QoQ improvement, HMCL has had to increase A&P; spends to drive volumes in a sluggish market. Upfront spends towards its foray into new international markets is also weighing on its margins. HMCL hopes to continue to derive cost savings with a projected Rs 2 to 2.5bn saving per annum in FY16/FY17 (Rs 3.2bn in FY15).

Buy at Rs 2,728.5 and add on dips to Rs 2,478 - 2,560 for target of Rs 3,056 in 1 quarter

Hero MotoCorp's (HMCL) Q3FY15 performance was below estimates on operational front. Its Revenue/EBIDTA fell 0.5%/8.5% YoY and 1.1%/12% QoQ respectively. Its PAT rose 11% YoY, but fell 24% QoQ. Company's EBIDTA margins came way below our as well as street's estimate at 12% (our Est was 14%) Its Other expenses rose 8.6% YoY and 10.2% QoQ to Rs 8bn, on account of higher promotional & brand building expenses in global market, part of which is non-recurring.

Hero Motocorp recorded Net sales of Rs. 6145.8cr which was up by 2% y-o-y on the back of slight increase in realization per unit by 1.8% although it was offset by...

Background: Hero MotoCorp is the largest two wheeler manufacturer in the World. The company was formed as a JV, promoted by Hero Cycles of India (promoters - Munjal Group) and Honda motors of Japan (26% stake). Honda has recently exited the JV. Hero's Indian market share is 45.2% (Motorcycle share - 56%) and 46% of its sales is from rural India. Hero sold 6.2 mn units in FY 12 & 80% of the volumes are from the 100cc Economy segment and is...

Background: Hero MotoCorp is the largest two wheeler manufacturer in the World. The company was formed as a JV, promoted by Hero Cycles of India (promoters - Munjal Group) and Honda motors of Japan (26% stake); Honda recently exited the JV. Hero's Indian market share is 45.2% (Motorcyle share - 56%) and 46% of its sales is from rural India. Hero sold 6.2 mn units in FY 12 & 80% of the volumes are from the 100cc Economy segment and is the market leader in that category. Its key models include Splendour...