India\’s leading two-wheeler maker Hero MotoCorp is likely to report solid growth in revenues for the fourth quarter, driven by robust increase in volumes and higher average selling prices (ASPs).
Revenue for the fourth quarter is seen growing around 14% year-on-year, according to an average estimate of four brokerages. Net profit for the same period is likely to rise 22% year-on-year.
The automaker had already reported 10% year-on-year growth in volumes, led by steady demand trends in the entry-level motorcycle segment.
Analysts also expect EBITDA margins to improve up to 123 bps year-on-year due to richer product mix (higher sale of premium motorcycles), commodity tailwinds, price hikes and lower other expenses.
Here\’s what to expect from Hero MotoCorp\’s Q4:
Axis Securities
Revenue is expected to increase by 14% year-on-year led by 10% increase in volumes, higher ASPs due to price hikes taken during the year, premiumization trend and recovery in entry level motorcycles.
Kotak Equities
We expect revenues to increase by 16% year-on-year in 4QFY24 led by 10% year-on-year increase in volumes and 5-6% year-on-year increase in ASPs due to price increases and a richer product mix (higher mix of premium motorcycles).
We expect EBITDA margin to improve by 60 bps quarter-on-quarter mainly driven by a richer product mix (higher mix of premium motorcycles segment), commodity tailwinds and lower advertisement spends, partly offset by negative operating leverage.
Nuvama
Revenue growth year-on-year to be supported by robust volume growth and increase in realizations. EBITDA margin to expand on better net pricing, mix and scale. Key thing to watch out for is the demand outlook.
Motilal Oswal
Volumes grew 10% year-on-year on a low base of last year. Overall, we expect HMCL to post 12% year-on-year growth in revenues in the fourth quarter. Margins to remain stable quarter-on-quarter at 14% (+100bp year-on-year). Overall, we expect HMCL to post a strong 19% year-on-year growth in earnings in the fourth quarter.
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