Hero MotoCorp (HMCL) revenue increased 39% YoY/-11% QoQ to Rs 86.9 billion. Revenue performance was driven by volume increase of 18% YoY/-15% QoQ to 1.6 million units. Spare parts revenue grew 40% YoY to Rs 10.5 billion. Average realization increased 5% QoQ to Rs 55.4k. Employee expenses increased 12% YoY/-6% QoQ to Rs 4.9 billion. Overall EBITDA for quarter increased 84% YoY/-14% QoQ to Rs 14.1 billion. EBTDA margin stood at 13.9% on account of lower RM cost. Adj. PAT increased 39% YoY/ -20% QoQ to Rs 8.7 billion.
Commenting on the result review, IDBI Capital said, HMCL Q4FY21 result was above our and consensus estimates on all parameters. Revenue was higher than our and consensus estimates mainly on account of higher realization, favorable product mix and higher spare part revenue."
It believes recent lockdowns announced by different states would impact wholesale demand in H1FY22 however government focus on vaccination program and unlocking 2.0 would help industry/ company to report strong numbers in H2FY22.
The broking firm expects domestic 2W industry to see a double growth for FY22 on a low base. "We do not expect any significant improvement in export sales for HMCL and wait for turnaround. We cut our volume estimates for FY22/FY23 by -1%/-3% for FY22/FY23 factoring the COVID second wave/lockdown in different states and expect 12%/10% volume growth for FY22/FY23 respectively."
IDBI Capital further expects revenue/earnings to grow at 13%/17% CAGR over FY21-FY23E respectively with EBITDA margin of 14%. "Due to recent 21% correction in share price we revise our rating to 'Accumulate' (earlier 'Reduce') and arrive at a TP of Rs 3,060 (earlier Rs 3,140) based on PER of 15x FY23E EPS."
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