Hero MotoCorp Q2FY24 Performance is reviewed in this blog post. We’ll delve into the key highlights of Hero MotoCorp’s Q2FY24 results and discuss their future strategies and outlook.
Table of Contents
Hero MotoCorp, India’s leading two-wheeler manufacturer, reported an impressive performance in the second quarter of fiscal year 2024 (Q2FY24). Lower raw material costs and a surge in rural demand were the driving forces behind this success.
Volume and Revenue Growth
- Hero MotoCorp witnessed a 4.7% quarter-on-quarter (Q-o-Q) increase in volumes.
- Revenues surged by 7.7% to approximately ₹9,445 crore.
Earnings Growth [Hero MotoCorp Q2FY24 Performance]
- Earnings before interest and tax, depreciation, and amortization (EBITDA) increased by 10.1% Q-o-Q to approximately ₹1,328 crore.
- The EBITDA margin expanded by 30 basis points (bps) Q-o-Q, reaching 14.1%.
- Gross margin also showed significant growth, expanding by around 80 bps.
Electric Vehicle (EV) Business
- The EV business exerted downward pressure on the EBITDA margin, declining by 90 bps due to the delayed realization of scale benefits.
Adjusted Profit After Tax (PAT)
- Adjusted PAT increased by 11.5% Q-o-Q to approximately ₹1,054 crore with an increase in Free Cash Flow.
Positive Outlook [Hero MotoCorp Q2FY24 Performance]
- Strong October sales volume, particularly during the festival season, has ignited optimism.
- Hero MotoCorp focuses on enhancing the customer experience through digitization, revamped dealerships, and expanding its presence in the scooter segment with aggressive product launches.
- The company is determined to gain more market share in the EV sector and drive unit revenue growth.
- Exports and the expectation of 14-16% EBITDA margins remain on the radar.
Future Strategies
- Clear Focus on EVs:
- Hero MotoCorp intends to strengthen its position in the electric vehicle market and diversify its EV offerings.
- Vida, the company’s EV brand, has been successful, reaching a monthly sales milestone of 2,000 units.
- Expansion plans involve reaching more than 100 cities by December 2023 and further diversification in FY25, with a current production run rate of approximately 1,000 units per week.
- Product Mix and Expansion:
- The company plans to leverage the positive festive season momentum and expand its product mix.
- Capacity Enhancement:
- Hero MotoCorp aims to ramp up production capacity for the Harley Davidson and Karizma ranges to 10,000 units per month.
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Analyst view on the stock
- The stock market response has been positive, and most analysts view Q2FY24 performance as in line with margin expectations.
- The long-term outlook is optimistic, with expectations of improved EBITDA margins as EV operating efficiencies come into play.
Disclaimer:
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