Hero MotoCorp - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 2,811; MCap: Rs. 56,136 crore)

Hero MotoCorp Ltd (HMCL) reported a strong set of Q1FY21 results, with all readings coming in higher than our estimates. Healthy beat on margins front was accompanied by PAT being in the black vs. our expectation of loss at that level.

Q1FY21 Earnings Summary

- Total 2-W sales volume for the quarter came in at 5.6 lakh units, down 69.4% YoY. Scooter sales volume stood at 33,447 units, down 71% YoY. Motorcycle sales volume stood at 5.3 lakh units, down 69.3% YoY

- Consequent net sales stood at Rs. 2,972 crore, down 63% YoY (I Direct estimate - Rs. 2,792 crore), tracking ~6.4% beat in blended ASPs during the quarter (Rs. 52,741/unit vs. I Direct estimate of Rs. 49,551/unit). ASPs rose by 12.8% on a sequential basis

- EBITDA in Q1FY21 stood at Rs. 108 crore, down 90.7% YoY with corresponding EBITDA margins at 3.6% vs. our estimate of Rs. 15 crore at 0.5%. Margin performance was encouraging considering mere 25% capacity utilisation during the quarter. The company informed that ex-fixed costs incurred during the lockdown period, margins were at 12% levels

- Consequent PAT for the quarter came in at Rs. 61.3 crore as against our loss estimate of Rs. 7.6 crore. Profitability beat was on account of higher than anticipated sales and margins

HMCL's Q1FY21 performance was a positive surprise on all fronts. The company remains at the forefront of post Covid volume recovery on the 2-W side and is expected to continue to benefit from vast rural demand slate as well as shift in consumer preference towards personal mobility. We will be coming out with a detailed report post the earnings conference call scheduled for tomorrow.

Shares of HERO MOTOCORP LTD. was last trading in BSE at Rs.2805.45 as compared to the previous close of Rs. 2811.25. The total number of shares traded during the day was 95452 in over 8200 trades.

The stock hit an intraday high of Rs. 2841 and intraday low of 2757.65. The net turnover during the day was Rs. 267018920.

Source : Equity Bulls

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