Hero MotoCorp Shares Rise as Q4 Numbers Top Street Expectations

Hero MotoCorp's Q4 profit rose 31% to Rs 811 crore.

Shares of Hero MotoCorp rose 1.2% at the opening of trading on Friday after the company reported fourth-quarter results. The stock regained most of its losses since April’s disappointing sales figures when both domestic and export volumes reflected slumping demand.

Shares of Hero MotoCorp were trading at Rs 2,544 on the BSE at 9:45 am.

The two-wheeler maker beat Street expectations, with net profit rising 37% year-on-year to Rs 859 crore on a 12% rise in revenue to Rs 8,307 crore. It declared a dividend of Rs 35 per share, which, together with the interim dividend of Rs 65 declared in February 2023, brings the total dividend for the financial year to Rs 100. Net profit rose 19% to Rs 3,875 crore in FY23, and revenue soared 16% to Rs 33,806 crore.

Its fourth-quarter numbers reflected improved pricing power. Following the quarterly results, analysts at Jefferies said the company’s EBITDA/vehicle had touched a new high of Rs 8,524. A year-on-year increase of 22% and a quarter-on-quarter increase of 14%. The brokerage has a “buy” call on the stock with a target price of Rs 3,000.

In an exchange filing, the company said its headline EBIDTA margin for the quarter was 13%, “reflecting 190 basis points year-over-year growth driven by lower commodity costs, higher savings and moderate price increases “.

Brokerages with a “sell” rating attributed the surprise profit boost to other investments and favourable seasonality.

UBS has a “sell” call on the stock with a price target of Rs 2,400, saying fourth-quarter operating profit topped market expectations, driven by a 144 basis point increase in gross margin. Net profit also beat estimates, but analysts believe this may have been helped by higher investment income. Revenue growth was mainly in line with their expectations.

Goldman Sachs has a ‘sell’ call on the stock with a price target of Rs 2,170, saying the figure beat expectations for better operating leverage and favourable seasonal factors.

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