Shares of Hero MotoCorp Limited tanked 2.5 per cent to hit a low of Rs 2580.55 on BSE a day after the company posted its numbers for the quarter ended September 2022.
The company posted a 10 per cent decline in its profit to Rs 716 crore for the second quarter ended September 30 as against Rs 794 crore in the year-ago period.
However, revenue from operations came in at Rs 9,075 crore, up 7 per cent from Rs 8,453 in the same quarter of the previous fiscal.
Commenting on the numbers, Mr Niranjan Gupta, Chief Financial Officer (CFO), Hero MotoCorp, said, “The global macro headwinds may keep the playfield a bit uncertain, and navigating the same over the next few quarters will be important. However, as the commodities cool off, and the rate cycle reaches its peak, the medium-term outlook for the Indian auto industry appears quite encouraging.тАЭ
The company sold 14.28 lakh units of motorcycles and scooters sold in Q2 FY23 and 28.18 lakh units in the first half of the current fiscal year.
According to Motilal Oswal, the stock trades at 18.6x/14.4x FY23E/FY24E EPS. Lower-than-estimated тАШother income’ and higher tax led to profit declining 10 per cent. Gross margins expanded 30 bps on a YoY basis to 28% owing to stable commodity costs and price hikes.
The brokerage has maintained a ‘Buy’ call on the stock post its Q2 performance.
Jefferies also has a ‘Buy’ call on Hero Motocorp with a target price of Rs 3000. It said that Earnings Before Interest, Tax, Depreciation, & Amortization (EBITDA) fell 3 per cent year-on-year (YoY) but was in line.
The bikemaker sales didn’t pick up much in October this year as against the same period a year before, said AK Prabhakar, Head of Capital, IDBI Capital. Most automobile stocks witnessed profit-booking today as Indian equity benchmarks paused their four-day winning run, Prabhakar added.
“Stocks specifically, within the two-wheeler companies, we believe it (Hero MotoCorp) is almost free from the exports weakness, led by improvement in the rural economy and upcoming EV launches, LKP Securities said.
