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Hero MotoCorp Q2FY24 Results Overview

Nov 2, 2023

By: BlinkX Research Team

Hero MotoCorp, a key player in the Indian two-wheeler industry, released its Q2FY24 results. The company's EBITDA showed solid growth, rising 28% year-on-year to reach Rs13.3 billion, which closely aligned with consensus estimates of Rs13 billion. 

This performance is expected to lead to a range-bound reaction in the stock market.

Key Financial Highlights

Revenue and Volume: 
Hero MotoCorp recorded a 4% year-on-year increase in revenue, reaching Rs94.5 billion, slightly surpassing the consensus estimate of Rs93.4 billion. However, the company witnessed a 1% decline in its sales volume, with 1.417 million units sold during the quarter. Notably, the realization per unit increased by 5% to Rs66,680.

Margin Expansion: 
The company's EBITDA margin expanded by 30 basis points compared to the previous quarter, marking a substantial 260 basis point expansion from the previous year, totaling 14.1%. 
Gross margins increased by 80 basis points quarter-on-quarter, reaching 31.4%. This growth was supported by price hikes and reduced input costs. 
Additionally, the employee cost as a percentage of sales decreased by 50 basis points to 6.1%, thanks to the benefits of a voluntary retirement scheme (VRS). However, other expenses as a percentage of sales increased by 90 basis points to 11.2%.

Other Income: 
The company saw a remarkable 170% year-on-year growth in other income, which amounted to Rs2.5 billion.

Adjusted Profit After Tax (PAT): 
The adjusted PAT surged by 47% year-on-year to Rs10.5 billion, surpassing consensus estimates of Rs9.6 billion. This increase was primarily attributed to higher other income.

Strategic Investments: 
Hero MotoCorp invested Rs5 billion in Ather Energy during Q2FY24.

Performance of Associates: 
The company reported a profit of Rs45 million from its associates in Q2FY24, a significant turnaround from a loss of Rs241 million in Q2FY23 and a loss of Rs945 million in Q1FY24.

These results demonstrate Hero MotoCorp's resilience and effective cost management in a dynamic market, positioning the company well in the ever-competitive Indian two-wheeler industry.