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Informist, Monday, Aug. 4, 2025
By Anand JC
NEW DELHI – Hero MotoCorp Ltd. is expected to report a low single-digit year-on-year decline in its top line for the June quarter due to a drop in two-wheeler sales during the period, according to analysts.
The Splendor-maker's net profit for the June quarter is expected to be INR 10.6 billion, down over 5% on year, according to the average of nine analysts' estimates. Sequentially, the fall is expected to be just below 2%.
The nine analysts' estimates are in a tight range – HDFC Securities' expectation of INR 10.3 billion profit is the lowest and JM Financial Institutional Securities' forecast of INR 10.9 billion is the highest.
Hero MotoCorp's revenue for the June quarter is expected to fall over 3% on year to INR 97.9 billion, as per a consensus of the nine analysts' estimates. Similar to the bottom line, the company's sequential decline in top line is expected to be lower at 1.5%.
SALES PERFORMANCE
Wholesale sales of two-wheelers in India fell 6% in the June quarter. This segment accounts for around 77% of overall automobile sales in India. Hero MotoCorp has a market share of around 30% in the country's two-wheeler market.
The company sold 1.37 million two-wheelers in the latest quarter, down 11% on year – registering a faster decline than the industry. Domestic sales during the quarter fell 12%, but exports grew 26% on year, despite the very low base.
The fall in sales can also be attributed to production challenges faced by the company in April. The company halted production temporarily at its Dharuhera, Neemrana, Gurugram, and Haridwar units for three days. This was to facilitate supply chain alignment and for scheduled maintenance and infrastructure enhancement, the company had said. As a result, the company produced only 1.4 million two-wheelers during the quarter, down nearly 10% on year.
OPERATIONAL PERFORMANCE
Hero MotoCorp's earnings before interest, tax, depreciation, and amortisation for the June quarter is expected to be INR 13.7 billion, according to the average of eight brokerages' estimates. This translates to a 6% on-year and a 3% sequential decline.
Motilal Oswal Financial Services' estimate of INR 13.3 billion for EBITDA is the lowest, while Nomura Equity Research's estimate of INR 14.1 billion is the highest.
Hero MotoCorp's revenue increase is also expected to reflect a 7% year-on-year increase in the average selling price of the company's two-wheelers, due to a higher mix of premium motorcycles, exports and spare parts, Kotak Institutional Equities said in a note. This is higher than the 4% on-year growth in selling price registered in the March quarter.
The higher average selling price of two-wheelers will also reflect the 2% price hike taken by the company. "OBD-II price increase is something which is effective April. You will see the impact of that in quarter 1 (Apr-Jun)," the company had said in an analysts' call after the March quarter earnings. OBD-II is the second generation of on-board diagnostics norms relating to emissions, which puts thresholds on the air contaminants in the exhaust output of vehicles and companies have raised prices to offset the cost of this higher compliance.
On Monday, shares of the company ended 5.2% higher on the National Stock Exchange at INR 4,535.90. Since reporting its earnings on May 13, shares of the company have gained roughly 14%. The company will detail its June quarter earnings on Wednesday.
As many as 16 brokerage firms have a 'buy' or equivalent call on the company at an average of INR 5,179 per share, while three have a hold call. Currently, there is one sell call on Hero MotoCorp.
Following are the Apr-Jun earnings estimates for Hero MotoCorp based on reports from nine broking firms in descending order of net profit:
|
Brokerage |
Net sales |
Net profit |
EBITDA |
|
(in INR mln) |
(in INR mln) |
(in INR mln) |
|
|
JM Financial Institutional Securities Pvt Ltd |
99,401.00 |
10,879.00 |
14,015.00 |
|
Nomura Equity Research |
1,00,829.00 |
10,775.00 |
14,059.00 |
|
YES Securities (India) Ltd |
99,379.00 |
10,696.00 |
13,922.00 |
|
InCred Research Services Pvt Ltd |
95,751.00 |
10,691.00 |
13,405.00 |
|
Kotak Institutional Equities |
99,074.00 |
10,678.00 |
13,937.00 |
|
Nirmal Bang Equities Pvt Ltd |
95,299.00 |
10,632.00 |
13,580.00 |
|
Motilal Oswal Financial Services Ltd |
96,654.00 |
10,450.00 |
13,341.00 |
|
Nuvama Wealth Management Ltd |
97,641.00 |
10,422.00 |
13,627.00 |
|
HDFC Securities Ltd |
97,432.00 |
10,303.00 |
|
|
Average |
97,940.00 |
10,614.00 |
13,735.75 |
End
Edited by Avishek Dutta
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