The share price of Hero MotoCorp fell almost 2 percent in the early trade on Friday after the company reported its June-quarter earnings which were hit severely due to coronavirus-induced lockdown.

Share Market Live

NSE

The stock declined as much as 1.90 percent to Rs 2,757.65 apiece on the BSE. It, however, recovered, trading 0.29 percent lower at Rs 2,803.20, at 11:42 am.

The company’s net profit in Q1FY21 fell 95.1 percent to Rs 61.3 crore from Rs 1,257.3 crore in the year-ago period. Revenue from operations declined 63 percent to Rs 2,971.5 crore from Rs 8,030.3 crore, YoY.

Operating performance was better than expected as EBITDA during the quarter was reported at Rs 108 crore as against CNBC-TV18's poll estimates of Rs 100 crore. However, EBITDA registered a decline of 90.7 percent YoY.

EBITDA margin contraction was also lower than expected. The operating margin during the quarter came in at 3.6 percent as against 14.4 percent, YoY. While the expectation was of 2.4 percent.

Global brokerage firm Morgan Stanley believes that the company’s better cost management led to margin beat. The brokerage is 'Underweight' on the stock with a target price of Rs 2,000 per share.

Hero MotoCorp sold a total of 5.65 lakh units of motorcycles and scooters in the first quarter. Sequential monthly sales of the company kept improving during the quarter as markets in several parts of the country gradually re-opened, thereby leading the revival of the domestic two-wheeler sector, the company said in a regulatory filing.

Delivering a positive bottom line, despite only 25 percent capacity utilization, reflects the resilience of the portfolio and ability to optimize costs and improve productivity, it added.

“The Covid-19 period has been an unprecedented challenge for the automotive industry, as indeed for several other sectors and economies around the world. Hero MotoCorp was quick to begin work on cost control and efficiencies that enabled us to limit the impact of the unprecedented times during the first quarter of the financial year. Cash conservation efforts and rationalization of expenses, along with productivity enhancement measures, have helped us pass through the uncertain period as we now enter the phase of rapid recovery and return of demand,” said Niranjan Gupta, Chief Financial Officer (CFO), Hero MotoCorp.

Gupta added that the company is seeing green shoots, and expects them to sustain and get stronger while moving towards the festive season. He said that the July month sales were more than 95 percent of pre-COVID sales.

Catch all the latest updates from the stock market here.

First Published:Aug 14, 2020 11:45 AM IST