Hero MotoCorp Slips Over 2% post inline Q4 Numbers

Shares of Hero Moto Corp BSE -0.90 % declined over 2 per cent in Friday’s trade after its March quarter numbers failed to enthuse investors.

The stock fell 2.24 per cent to hit a low of Rs 2,829 on BSE.

The motorcycle maker on Thursday reported markedly improved financial results for the fourth quarter (Q4) of 2015-16 (FY16). It’s full-year performance, however, was sluggish. Standalone Q4 net sales of the two-wheeler major came in at Rs 7,385 crore, which worked out to be 10.3 per cent higher than the net sales recorded for the year-ago quarter.

This growth rate was the highest in the last six quarters and in FY16, Q4 was the second consecutive quarter of positive growth after the numbers for the first two quarters came in the negative.

The two-wheeler industry growth is expected to be in low single digits in the first half of FY17, before recovering a bit in the second half, if the monsoon outcome is as per expectations.

We revise upwards our FY17/18E EPS target by 2/3 per cent to factor in higher volumes due to expectation of normal monsoon. At current market price, the stock trades at FY18E PER of 15 times. We maintain a hold rating with a target price of Rs 2,904 (15 times FY18E core EPS plus Rs 344 cash per share),” EdelweissBSE 1.46 % Securities.

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