Hero MotoCorp, the country’s largest two-wheeler maker, reported impressive financials for Q1 FY2024 on Thursday. The company’s Profit After Tax (PAT) saw a robust 32% YoY increase, rising to Rs 825 crore compared to Rs 624.52 crore in the corresponding period last year. Revenue for the quarter marked a 4.5% growth at Rs 8,767.27 crore, compared to Rs 8,392.54 crore in Q1 FY2023.
Despite a dip in sales volumes, with a 3% decline in total sales, including exports, to 13.53 lakh units, the firm’s profit surged. Domestic sales were marginally down by 0.8% YoY, while exports slumped by 43%.
Factors Boosting Hero MotoCorp Performance
The increase in profits is attributed to several factors, including lower commodity costs, price hikes, positive operating leverage, and a richer product mix. The company’s EBITDA for Q1 FY’24 stood at Rs 1,206 crore, marking a 28% growth. EBITDA margin for the quarter improved by 250 basis points to 13.8%, with underlying EBITDA margin for the Internal Combustion Engine (ICE) Business at 14.5%.
The Profit Before Tax (PBT) and exceptional items were at Rs 1,255 crore, reflecting a growth of 52% over Rs 824 crore reported in the previous quarter.
Future Growth Prospects of Hero MotoCorp
Hero MotoCorp has expressed optimism about the momentum building up in the coming quarters, with a focus on growth, market share, and expansion into the premium segment.
CEO Niranjan Gupta commented,
“We have begun strengthening our presence in the premium segment, and our EV presence is getting scaled up. We are on track to cover 100 cities by December this year.”
Gupta also emphasized the return of underlying margins in ICE business to pre-COVID levels.
The company’s upcoming launches, particularly in the premium segment, and the acceleration in EV presence, are seen as key growth drivers. The expected favorable economic indicators and positive consumer sentiments are likely to further support the upward trend.
Market Response
Despite the promising results, Hero MotoCorp’s share price dropped 0.91% to Rs 3,029.35 on the BSE on August 10.
Hero MotoCorp Price Prediction: Analyst Expectations and Projections
The Q1 FY2024 results were in line with analysts’ expectations, with various projections from Kotak Institutional Equities, Nirmal Bang, and others closely aligning with the actual figures. While the drop in sales volumes due to continued weakness in the entry-level motorcycle segment was noted, better realizations, improved operating leverage, and price hikes have contributed to the overall positive financial performance.
Conclusion
Hero MotoCorp’s Q1 FY2024 results reflect a strong financial position, driven by strategic pricing, product mix, and operational efficiency. The focus on premium and electric vehicle segments, combined with favorable economic conditions, may set the stage for continued growth in the coming quarters.
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