Arihant Capital has given Buy recommendation for Hero MotoCorp with a target price of Rs. 3405 in its research report issued on Aug 16, 2022
Arihant Capital’s research report on Hero MotoCorp
Hero MotoCorp (HMCL) standalone revenue stood at INR 83,925 Mn, against our estimate of INR 87,430 Mn registering a growth 53% YoY/ 13.1% QoQ. The company shows significant improvement sequentially led by positive momentum in the industry and coupled with market share gain. Maintained its EBITDA Margin on QoQ: EBITDA stood at INR 9,408 Mn, against our estimate of INR 10,750 Mn, Registering a growth of 82.7%YoY/ 13.7%QoQ.On the margins front, EBITDA margin expansion by 183bps YoY/ 6bpsQoQ to 11.2%, against our estimate of 12.3%. Despite the commodity headwinds and supply chain disruptions consequent to geo–political issues, the Company maintained its EBITDA margins sequentially, through a combination of cost saving measures, judicious price increases and premiumization of model lineup . The PBT for the quarter was impacted by lower other income arising from MTM (mark to market loss), to the extent of INR 600 Mn.
We value Hero MotoCorp at a PE of 19x to its FY24E EPS of INR 179, which yields a revised target price of INR 3,405 per share (earlier target price; INR 3,323 per share). We maintain our Buy rating on the stock .