Hero Moto Earnings Preview: Urban demand recovery, Navratri sales to drive earnings

India's largest two-wheeler manufacturer Hero MotoCorp will be reporting results on Thursday. The company is likely to report double-digit growth in its topline and bottomline during the March quarter.

A CNBC-TV18 poll also expects the company's operating margin to expand by 100 basis points compared to the same period last year.

After seeing a 4 percent decline in volumes during the December quarter, Hero Moto is likely to report volume growth of 6.9 percent during the March quarter.

Hero Moto sold 12.7 lakh units during the March quarter, compared to 11.89 lakh units during the same period last year.

Volume growth during the quarter is likely to be driven by a healthy recovery in urban demand, traction during Navratri and channel filling, ahead of BS6-II norms.

Operating leverage is expected due to price hikes undertaken by the company to pass on higher raw material prices.

Hero MotoCorp’s market share in the domestic motorcycle segment has declined to 45.8 percent in the first nine months of the financial year 2023 from 53 percent in financial year 2016.

Kotak Securities in a note late March, maintained its ‘reduce’ rating on the stock, saying that there was no respite for the company from the recent challenges it has been facing. The brokerage also cut its price target on Hero to Rs 2,400 from Rs 2,600 earlier.

Explaining the rationale behind its stance, Kotak Securities said that continued increase in the cost of ownership of vehicles, higher inflation, weak rural demand and concerns around El Nino are the key overhangs on the two-wheeler maker.

Shares of Hero MotoCorp are down 8 percent on a year-to-date basis.