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Reliance Securities Report
Hero MotoCorp Ltd. reported subdued performance in Q1 FY23 with lower Ebitda margin of 11.2% as against our estimate of 12%. Revenue increased by 53% YoY/13% QoQ to Rs 83.9 billion (3.8% below our estimate of Rs 87.2 billion), on the back of a volume growth of 36%YoY/17%QoQ and a 13% YoY improvement in average realisation due to price hikes.
However, average selling price was lower than expected due to lower spare revenues. Its Ebitda margin expanded by 183 bps YoY (flat QoQ) to 11.2% while Ebitda increased by 83% YoY (up 14% QoQ) to Rs 9.4 billion (10.2% below our estimate of Rs 10.5 billion) due to lower-than-expected revenue, higher ads and sales expenses and commodity cost inflation.
Hero MotoCorp’s profit after tax came in at Rs 6.3 billion (up 71% YoY and flat QoQ), 16.4% below our estimate of Rs 7.5 billion due to lower operating margins and mark to market loss on investment.
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