Hero MotoCorp Q3 preview: Marginal bump in profit, revenue expected despite flat volumes

Hero MotoCorp will see a marginal increase in its profit and revenues for the third quarter, despite flattish volumes, mainly driven by improved mix and higher average selling prices (ASPs). Volumes were flat during the quarter due to lagging two-wheeler demand.

Revenue from operations is likely to rise 3% year-on-year (YoY), according to an average estimate of five brokerages. Meanwhile, PAT is seen rising 2% YoY.

EBITDA margins for the third quarter are likely to improve on a YoY basis, but decline QoQ. The sequential margin contraction will be due to lower volumes and higher discounts during the festive season.

Here’s what to expect from Hero MotoCorp Q3:

Axis Securities

Revenue is expected to increase by 3% YoY led by flat volumes, higher ASPs due to price hikes taken during the year, premiumization trend and higher export volumes.

Nuvama

Revenue growth YoY shall be supported by increase in realisation. EBITDA margin to be flat. Key things to watch out for is demand outlook and timeline of new launches.

Also Read: Swiggy Q3 Preview: Losses may expand QoQ even as revenue seen trending higher

Motilal Oswal

Volume growth remained flat YoY in 3Q as the two-wheeler demand lagged expectations. We expect its ASP to improve 4% YoY, led by an improved mix of 125cc. This is likely to drive revenue growth of 4% YoY.

However, we expect EBITDA margins to contract 50 bp QoQ to 14%, led by lower volumes and higher discounts during the festivals. As a result, we expect PAT to decline 5.5% YoY in 3Q.

Kotak Equities

We expect revenues to increase 3% YoY in the third quarter, led by flat YoY volumes, driven by the ramp-up of Xtreme 125 volumes, offset by weakness in 110 cc motorcycle segment and 2-3% YoY increase in ASPs due to richer product mix (higher mix of premium motorcycles and 125 cc motorcycle segment).

We expect EBITDA margin to improve 20 bps YoY to 14.2%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)