Hero MotoCorp slips over 3 per cent post Q4 numbers; stock slips below Rs 2,300

NEW DELHI: Hero MotoCorp Ltd plunged as much as 3.46 per cent in trade on Thursday after the country's largest two-wheeler maker reported 3.44 per cent decline in its standalone net profit for the fourth quarter ended March 31, 2014 at Rs 554.43 crore.

Reacting to the news, Hero MotoCorp slipped below its crucial psychological support level of Rs 2300 in trade today to hit its intraday low of Rs 2268.90. However, the stock recouped some of the losses and was trading 1.8 per cent lower at Rs 2308.30, as on 09:30 a.m.

The company had reported a standalone net profit of Rs 574.23 crore in the same quarter of the previous fiscal. Net sales during the period under review stood at Rs 6,455.7 crore as against Rs 6,072.47 crore in the same quarter previous fiscal, up 6.31 per cent.

The top-line recorded a growth of 6 per cent YoY to Rs 6,513cr, in-line with analysts' estimates of Rs 6,451cr, led by a 4.1 per cent YoY growth in volumes and 2.2 per cent YoY growth in net average realization.

The volume performance was driven primarily by a strong growth of the scooter segment (15.5% YoY) even though the motorcycle segment registered a modest growth of 2.7 per cent YoY, Angel Broking said in a note.

Exports growth though remained weak due to weakness in the global markets and posted a decline of 11.3 per cent YoY, added the Angel Broking report. On the operating front, EBITDA margins expanded 67 bps QoQ to 13.7 per cent, which was marginally better than expectations.

At the CMP, the stock is trading at 14.1x FY2016E earnings.The Mumbai-based brokerage firm maintains their 'Accumulate' rating on the stock; however, they have kept the target price under review.