Hero MotoCorp Q1 preview: Profit may dip up to 94% YoY as sales take a hit

Jannie Delucca

Hero MotoCorp is scheduled to announce its June quarter final results for the first quarter of fiscal 2021 (Q1FY21) on Thursday. Analysts assume the firm’s Q1 net gain to tumble any where in the assortment of 72-ninety four for each cent on a calendar year-on-calendar year basis (YoY), led by huge decrease in overall volumes. Revenues are also observed declining around 60 for each cent YoY owing to the disruption in the firm’s functions prompted by coronavirus-led nationwide lockdown.

Through the quarter underneath evaluate, Hero MotoCorp marketed 5.63 lakh models, down sixty nine.four for each cent YoY from 18.four lakh models in Q1FY20. In the calendar year-in the past quarter, the corporation experienced marketed 13.34 lakh models. In Q1FY20, it experienced described income of Rs 8,030.3 crore and gain of Rs 741.one crore on a standalone basis.

At the bourses, Hero MotoCorp’s inventory obtained 34.7 for each cent in the course of the quarter underneath evaluate as in contrast to the benchmark S&P BSE Sensex’s 18.forty eight for each cent achieve in the very same interval, ACE Fairness facts display.

In accordance to analysts, Hero MotoCorp’s channel stock ranges, demand from customers outlook and client response for new merchandise launched will be the critical monitorables.

Here is what the major brokerages assume from Hero MotoCorp’s Q1FY21 final results.

Nomura

Nomura is making around 63 for each cent YoY decrease in Hero MotoCorp’s Q1 revenues to Rs six,405.four crore amid sharp decrease in overall volumes. Web gain is also observed tumbling 87 for each cent YoY to Rs 755.9 crore.

“Margins to decrease to four.3 for each cent from fourteen.four for each cent in the calendar year-in the past quarter (one,013 basis points decrease) on BS-six charge go by and set fees. Ebitda is observed at Rs 826.9 crore, down 89 for each cent from Rs one,158 crore described in Q1FY20,” the brokerage explained.

Emkay Global

The brokerage expects Hero MotoCorp’s revenues to drop sixty two.four for each cent YoY to Rs 3,022.7 crore, led by a sixty nine for each cent drop in volumes. On the other hand, the drop will be cushioned by an enhance in realizations and greater share of spares. “Realisations are expected to enhance owing to cost hikes (BSVI, protection norms and charge inflation). Gross margin is expected to enhance owing to greater spare mix and decreased enter charge,” it explained. In general, the brokerage expects Hero MotoCorp’s gain to drop 72 for each cent YoY from Rs 763.two crore to Rs 214.one crore. Sequentially, gain would decrease 65.5 for each cent.

Meanwhile, Ebitda margins are expected to contract to 7.one for each cent from fourteen.four for each cent in the calendar year-in the past quarter owing to a decreased scale. Earnings right before interest, tax, depreciation, and ammortisation (Ebitda) may perhaps dip eighty one.5 for each cent YoY to Rs 214.7 crore.

ICICI Securities

Analysts at ICICI Securities see Hero MotoCorp’s Q1 income dipping around 67 for each cent YoY to Rs two,659.four crore, largely owing to the huge quantity drop. Profit is expected to register an even greater drop (down 85 for each cent YoY) to Rs 77.7 crore.

On the other hand, it expects net realisations to make improvements to around 8 for each cent owing to go-by of the BS-VI cost enhance. Ebitda margin is expected to decrease 917 bps YoY owing to greater other fees (up 189 bps) and sticky worker fees (up 727 bps). Ebitda may perhaps come in at Rs one,39.six crore, a drop of 88 for each cent YoY and 70 for each cent on a sequential basis.

Nirmal Bang

In accordance to Nirmal Bang, the firm’s destructive functioning leverage (on decreased quantity owing to Covid-19 lockdown) and decreased utilisation stage (owing to provide problems) in the course of the quarter is probably to have an impact on its Ebitda margin which is observed at two for each cent, down from fourteen.four for each cent in Q1FY20.

Hero MotoCorp’s income may perhaps drop sixty six.four for each cent YoY to Rs two,seven hundred.six crore even though net gain may perhaps tumble ninety three.8 for each cent YoY to Rs forty eight.7 crore. The corporation is observed reporting an Ebitda of Rs fifty four crore, down 95.3 for each cent YoY.

Prabhudas Lilladher

In accordance to analysts at Prabhudas Lilladher, “With quantity decrease of around sixty nine for each cent YoY but expected realisation enhance of around 10.5 for each cent YoY on account of the latest product cost hikes and BS6 mix, income to decrease sixty six for each cent YoY to Rs 2712.8 crore even though gain may perhaps come down eighty four.8 for each cent YoY to Rs one hundred fifteen.six crore.

“Functioning margins are expected to contract 980 bps YoY and 600 bps sequentially to four.six for each cent led by destructive functioning leverage. Ebitda is observed slipping 89.3 for each cent YoY to Rs 123.six crore,” they explained.

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