Hero MotoCorp Shares Were Choppy, Q4 on Friday
Hero MotoCorp shares were choppy on Friday, even though India’s biggest two wheeler makers posted a solid 71 percent jump in its net profit in quarter 4, meeting Street estimates. Hero MotoCorp reported a net profit of Rs 814 crore in the march Quarter. While sales has been increased up to 10 percent to Rs 7,385 crore.
Domestic brokerage Religare said, Hero MotoCorp,s Q4 revenue growth was supported by 9.3 percent increase in volume and 1 percent increase in realizations. Hero MotoCorp’s EBITDA or operating margin increased by 331 basis points to 15.7 percent led by lower raw materials costs in Q4.
Hero’s margins to remain around 15 percent in coming quarters, however Hero’s FY17/FY18 margin is likely to 15.2 percent. Which remain lower from 15.5 percent in FY16 because of higher commodity prices, rising R&D and export market spends and deterioration of product mix, said brokerage Ambit Capital.
Ambit also expects Hero to lose market share in the domestic motorcycle segment due to rising competition on core segments and lack of presence in fast growing premium.
‘’New scooter launches are likely to offset the impact of market share loss in motorcycles. Hero expect 130 basis points market share loss in domestic two wheelers over FY17/FY18’’, the brokerage said.
‘’Hero has remained largely unscathed in terms of motorcycle market share. We expect that with the two new launches in scooter segment, we are likely to gain market share in scooter space. Soon, Hero is well set to capitalize on any revival in demand in the domestic two wheeler market in H2FY17/ and FY18’’. Brokerage added.
‘’With forecast of a normal monsoon in FY17, we expect Hero MotoCorp shares volume growth to continue in second half of FY17’’, brokerage said.
Hero MotoCorp shares stock with target price of Rs 3,300, as of 12.50 pm hero shares traded 0.94 percent lower at Rs 2,866.5 apiece compared to 0.94 percent loss in the broader Sensex.