Hero MotoCorp - Result Update - ICICI Securities

Hero MotoCorp (HMCL) reported mixed Q4FY20 results. Total 2-W volumes at 13.3 lakh units were down 25.1% YoY. Net sales were at Rs. 6,238 crore (down 21% YoY), with blended ASPs up 5.6% YoY to Rs. 46,747/unit. EBITDA margins came in at 10.6%, a multi-year low (down 420 bps QoQ) on the back of 260 bps QoQ gross margin deterioration. Consequent PAT was at Rs. 621 crore, supported by lower tax outgo (tax rate a mere 4.6%). HMCL declared a final dividend of Rs. 25/share for FY20 (total dividend Rs. 90/share).

Valuation & Outlook

We continue to like HMCL for its market leadership in pockets that are expected to recover quicker once Covid-19 effect subsides and for its robust financials [debt free B/S, healthy return ratios, strong cash generation (present FCF yield ~8%)]. However, a sharp stock price run up in the recent past places HMCL near its long period average valuation parameters. We value HMCL at Rs. 2,500 (17x P/E on FY22E EPS of Rs. 147.6) and assign HOLD.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HeroMotoCorp_Q4FY20.pdf

Shares of HERO MOTOCORP LTD. was last trading in BSE at Rs.2292.2 as compared to the previous close of Rs. 2385.65. The total number of shares traded during the day was 79159 in over 8866 trades.

The stock hit an intraday high of Rs. 2384.7 and intraday low of 2283. The net turnover during the day was Rs. 183623761.

Source : Equity Bulls

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