Prabhudas Lilladher recommended accumulate rating on Hero MotoCorp with a target price of Rs 3980 in its research report dated May 02, 2018.
Prabhudas Lilladher's research report on Hero MotoCorp
Hero MotoCorp's (HMCL) Q4FY18 performance was slightly below expected lines, with operating margins at 16%, higher 220bps YoY and 20bps QoQ, but below our expectations of 16.8%. Revenue growth for the quarter was good at ~24% YoY to Rs85.6bn (PLe: Rs87.5bn), with EBITDA growth of 43% YoY to Rs13.7bn (PLe: Rs14.7bn). Higher than expected non-operating income helped boost Q4FY18 net profit for the company to Rs9.7bn, up 35% YoY (PLe: Rs10.4bn).
Outlook
We have cut our FY19E margin estimates by 50bps to factor in the same. We maintain 'Accumulate' with a price target of Rs3,980 based on 20x Mar'20 EPS. At the current price, the stock is trading at 20.5x FY19E and 18.4x FY20E EPS.
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