Hero MotoCorp Q3 Results Preview: Profit, margins to decline marginally despite easing raw material costs

Two-wheeler major Hero MotoCorp’s margin is estimated to decline by 40 basis points (bps) to 11.8 per cent from 12.2 per cent YoY for the third quarter of the current financial year, according to Zee Business research. 

This will be despite easing raw material cost during the reporting quarter, the research report said.  

The Delhi-based two-wheeler major will report its quarterly earnings on Tuesday, February 7, 2023. 

Hero MotoCorp is likely to report a 4.2 per cent decline in the net profit to Rs 657 crore for the quarter ended December 2022. The auto company had posted Rs 686 crore profit in the October-December period of the previous fiscal. 

The auto major, led by billionaire Pawan Munjal, is expected to post revenue flat (up 0.8 per cent) year-on-year (YoY) to Rs 7,950 crore, according to analyst estimates, this report said.  This could be attributed to 8.4 per cent YoY decline to 12,39,693 units. 

“We are building Hero MotoCorp’s EBITDA margin to improve 50 bps sequentially, primarily due to raw material tailwinds, and price hikes taken by the company, offset by negative operating leverage,” analysts at Kotak Institutional Equities said. 

The earnings before interest, taxes, depreciation and amortization (EBITDA) of Hero MotoCorp is likely to grow by 2.1 per cent – mainly due to lower input costs – to Rs 940 crore in the December quarter of FY23 as compared to Rs 960 crore in the corresponding quarter of the previous fiscal. 

The overall demand for Hero MotoCorp two-wheelers is seen declining despite the reduction in supply-side shortage, Zee Business research noted.   

Hero MotoCorp share price was among the top gainers on the Nifty50 index as it closed over 1.5 per cent higher at Rs 2,699 apiece at the market close, after trading between in the day-low high range of Rs 2,704.80 – Rs 2,652.05 per share on the NSE. 

Domestic brokerage firm Motilal Oswal maintained a ‘buy’ rating on the stock with a short target price of Rs 2717 apiece.