Hero MotoCorp (HMCL) has moved higher by 3% to Rs 1,998, also its 52-week high, on the Bombay Stock Exchange (BSE).
The stock of two-wheeler maker has outperformed the market by surging 10% since announcement of April-June (Q1) quarter earnings on July 24. The benchmark S&P BSE Sensex has dipped 6.4%, while auto sector index was up 0.20% during the same period.
HMCL’s operating performance surprised positively as the EBITDA margin expanded 103bp quarter-on-quarter (qoq) to 14.9%. This was ahead of our expectations of 14.1% and was driven by a 10% qoq decline in other expenditure, which was on account of lower advertising expenditure and also due to the ongoing cost control efforts, says analyst at Angel Broking.
According to the Management, the five year warranty scheme announced by the company has been received well by the market. The Management expects the domestic two-wheeler industry to grow at a rate of 6-8% in FY2014 driven by better monsoons and festival demand.
HMCL has undertaken an intensive cost reduction initiative and expects benefits of 400-500bp in operating margins over the next 12-15 months.
The stock of two-wheeler maker has outperformed the market by surging 10% since announcement of April-June (Q1) quarter earnings on July 24. The benchmark S&P BSE Sensex has dipped 6.4%, while auto sector index was up 0.20% during the same period.
HMCL’s operating performance surprised positively as the EBITDA margin expanded 103bp quarter-on-quarter (qoq) to 14.9%. This was ahead of our expectations of 14.1% and was driven by a 10% qoq decline in other expenditure, which was on account of lower advertising expenditure and also due to the ongoing cost control efforts, says analyst at Angel Broking.
According to the Management, the five year warranty scheme announced by the company has been received well by the market. The Management expects the domestic two-wheeler industry to grow at a rate of 6-8% in FY2014 driven by better monsoons and festival demand.
HMCL has undertaken an intensive cost reduction initiative and expects benefits of 400-500bp in operating margins over the next 12-15 months.
