Hero MotoCorp is set to announce its fourth-quarter financial results for the fiscal year ending in March 2024 (Q4FY24) on Wednesday, May 8. 

On May 1, Hero MotoCorp reported a 35 per cent surge in sales for April. The two-wheeler giant sold 533,585 units of motorcycles and scooters in April 2024.

Analysts anticipate a robust quarter for Hero MotoCorp, driven by healthy volume growth and strong sales figures. The company’s proactive response to rising demand is expected to further boost its performance.

Here’s what brokerage said:

Kotak Institutional Equities

Q4FY24 is set for a 16 per cent year-on-year (Y-o-Y) revenue upsurge for Hero MotoCorp. This growth trajectory is propelled by two primary factors including a 10 per cent year-on-year surge in volumes fuelled by consistent demand trends, notably the recovery in the entry-level motorcycle segment; and a 5-6 per cent year-on-year rise in Average Selling Prices (ASPs) attributed to price hikes and an enriched product mix, with a greater emphasis on premium motorcycles, according to Kotak Institutional Equities.

Moreover, analysts forecast a 60 basis points (bps) quarter-on-quarter (Q-o-Q) enhancement in Ebitda margin for the two-wheeler giant. This improvement is chiefly steered by three key drivers: a more upscale product mix, marked by a higher share of premium motorcycles; favourable commodity market dynamics; and reduced expenditure on advertising, albeit partially offset by negative operating leverage.

Considering these factors, Kotak Institutional Equities forecasts Hero MotoCorp’s profit to climb 26.9 per cent Y-o-Y to Rs 1,089.9 crore in Q4, revenue to surge 15.6 per cent to Rs 9,598.7 crore, Ebitda to rise 29.2 per cent to Rs 1,398.8 crore, and margin to come in at 14.6 percent.

Prabhudas Liladher 

Prabhudas Liladher anticipates a revenue growth of 12.6 per cent year-on-year for Hero MotoCorp, driven by a 9.6 per cent year-on-year increase in volume and higher ASPs. 

Improved product mix and stable raw material prices are expected to lead to a 114 basis points year-on-year expansion in Ebitda margins, consequently resulting in a 20.2 per cent year-on-year growth in PAT.

Key tailwinds, analysts believe, for FY25 include the upcoming festive season and stable pricing environments, while headwinds include potential impacts from increased interest rates, inflation, heightened competition, and global economic slowdown.

Therefore, Prabhudas Lilladher forecasts that Hero MotoCorp’s adjusted profit to jump 20.2 per cent to Rs 1,032 crore in Q4, Ebitda to soar 22.4 per cent to Rs 1,326 crore, and a margin to climb 114 bps to 14.2 per cent.

HDFC Securities 

The growth in the entry segment, observed during the previous quarter’s festive season, has subsided, with volume growth primarily propelled by sustained momentum in the 125cc+ motorcycle segment, according to HDFC Securities. Anticipated growth in the entry-level two wheeler (2W) segment post-H2FY25 is attributed to expectations of a favourable monsoon and marriage season.

Despite strong volume growth and margin improvement, a 12 per cent sequential decline in earnings is expected due to ongoing weakness in entry-level 2W demand. 

Additionally, higher promotional spends associated with the launch of Mavrick 440 and Xtreme 125R are likely to impact margins on a quarter-on-quarter basis.

Therefore, HDFC Securities predicts that Hero MotoCorp will announce a profit after tax (PAT) of Rs 877.8 crore, up 23.4 per cent Y-o-Y; revenue to rise 10.7 per cent to Rs 9,191.9 crore, and margin to drop 4 bps to 13 per cent.

ICICI Securities

ICICI Securities predicts that auto ancillary players will witness more pronounced year-on-year (Y-o-Y) Ebitda growth, fuelled by a recovery in exports, premiumisation in domestic auto production, increased demand from domestic OEMs, and favourable raw material cost trends. 

Additionally, they expect tire players to achieve strong year-on-year earnings growth of approximately 30 per cent due to favourable raw material costs.

Key factors to watch out for include the demand outlook for rural markets, progress in electric vehicle (EV) development, continuity of exports revival, raw material situation, acceptance of premiumisation, competitive intensity in UVs, premium bikes, and electric two-wheelers, M&A activity, and investment in EVs by players.

Therefore, ICICI Securities anticipates HeroMotoCorp’s adjusted profit to rise 20 per cent Y-o-Y to Rs 1,027.5 crore, revenue to jump 19 per cent to Rs 9,329.2 crore, and Ebitda to climb 12 per cent to Rs 1,292 crore.

First Published: May 07 2024 | 11:08 AM IST