Hero MotoCorp - Improving Rural Sentiments To Support Volume Recovery: Nirmal Bang

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Nirmal Bang Report

We recently hosted Hero MotoCorp Ltd. at our virtual conference. We are relatively cautious on the company due to soft underlying demand trends in the domestic market and note that recovery in price-sensitive entry segment may be further delayed due to the second Covid-19 wave and cost inflation.

Following are the key takeaways from our meeting.

• Demand was affected due to production shutdowns and lockdown restrictions. However, the rural economy is holding reasonably better.

• Inventory levels were 5-5.5 weeks in Q4 FY21, which went up to six weeks but declined in May 2021, led by stronger retails.

• Commodity costs continue to be elevated and may lead to another round of price hikes depending on the trajectory.

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