HeroMoto Corp, which is expected to release its March quarter (Q4FY21) results on May 6, is expected to post nearly 60% year-on-year growth in earnings before interest, taxes, depreciation and amortization (Ebitda), on volume of healthy sales. and low base effect. However, price increases due to the BS-VI transition and the offset increase in input costs may not be enough to cushion the EBITDA margin, analysts believe.
On the stock markets, however, the two-wheeler manufacturer’s stock underperformed the benchmark Nifty50 and the Nifty Auto index, according to data from ACE Equity. For three months through March, Hero Moto stock was down 6.3% on the NSE compared to a gain of 5% and 7.2% in benchmarks and sector indices, respectively.
Here’s what the major brokers expect from Hero Moto’s outcome:
Nomura
Global brokerage has one of the most conservative estimates for the New Delhi-based company with stand-alone net profit of Rs 794 crore, up around 28% year-on-year, in the quarter under review. This compares to PAT of Rs 620.7 crore released at T4FY20 and Rs 1,084.5 crore at T3FY21.
Revenue and EBITDA, meanwhile, could rise 33% year-on-year each to Rs 8,493.8 crore and Rs 1,102.3 crore, respectively.
“We expect revenue growth of 33% year-over-year, driven by 18% growth in overall volumes and an increase in prices due to the BS-6 models. Margins are expected to drop 150 basis points QoQ due to rising raw material costs, â€he said in his earnings expectations report.
Emkay Global
This brokerage predicts a 61% annual increase in EBITDA to Rs 1,061.9 crore from Rs 659.9 crore reported in the previous year period. Sequentially, however, this would mean a 25% contraction from Rs 1,413.6 crore reported at T3FY21.
Revenues too, she said, are expected to decline sequentially to Rs 8,490.1 crore, driven by a 15% drop in QoQ of volumes. Sales were Rs 9,775.8 crore in the December quarter of FY21 and Rs 6,238.4 crore in Q4FY20. “Despite a mild exchange rate movement (depreciation of the JPY), the EBITDA margin may contract to 12.5 percent on higher input costs and a lower scale,” he added.
Ultimately, PAT is expected to swell 33% year on year to Rs 824 crore but slide 24% over the quarter.
Kotak Institutional Actions
According to one of the more optimistic estimates, KIE sets Hero Moto’s PAT at Rs 851.6 crore, up 37% year-on-year and down just 21% in QoQ. Operationally, he expects Ebitda to zoom more than 68% to Rs 1,110.5 crore from last year, thanks to the operating leverage benefits in 4QFY21.
“We expect revenue to grow 35% year-on-year in the fourth quarter of FY21, due to an 18% year-on-year volume increase and 17% year-on-year average selling prices due to of the BS-VI transition and the price increase taken to compensate for the increase in input costs â€it is noted. Overall, he expects gross margin to decline by 230 bps year-on-year, driven by input cost pressures in the quarter under review.
Nirmal Bang
He expects Hero MotoCorp’s net profit to grow 30% year-on-year (Rs 804 crore), driven by 18% year-over-year volume growth and margin expansion (+ 240 bps year-on-year). annual). That said, given that headwinds on input costs are expected to continue over the next few quarters, the EBITDA margin in this quarter could drop 150 basis points at QoQ to 13%.
BOB Capital
The brokerage expects that since ASP has risen by around 2 percent QoQ given recent price increases, while volumes have fallen 15 percent, revenues could drop to around 13 percent QoQ . The gross margin is expected to contract sequentially, weighing on the Ebitda margin (–210bps QoQ at 12.4 percent), he said. The main controls for the brokerage would be inventory levels, new launches and any supplier-side supply challenges in the midst of the second wave of Covid-19.
IIFL titles
The brokerage fixed sales at 1,568,262 units, down 15% sequentially (against 1,846,941 units) but up 17.5% year-on-year (1,334,511 units). Considering the 1.5 percent price hike and the simultaneous increase in input costs, revenues are expected to slide 13 percent to Rs 8,508.3 crore from T3FY21.
Ebitda and PAT could also fall 22% and 28% quarter over quarter to Rs 1,108.2 crore and Rs 785.6 crore, respectively. The EBITDA margin could dip 143bp QoQ (up to 245bp year-on-year) to 13%.