Concall Summary: Hero MotoCorp Q4FY20

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Participants:

  • Systematix
  • Axis Capital
  • Nomura Securities
  • JP Morgan
  • Antique
  • Equirus Capital
  • CLSA
  • Avendus Capital
  • Kotak Securities
  • Motilal Oswal Financial
  • Sundaram Mutual Fund
  • Edelweiss Securities
  • ICICI Securities

Business Overview:

  • Q4FY20 Revenue at Rs 6,334 crore vs Rs 7,953 crore YoY
  • Q4FY20 PAT at Rs 605 crore vs Rs 771 crore YoY

ConCall highlights:

  • Lost sales of 2.3 lakh unit in the last 9 days of March, including this sales would have been Rs 7,400 crore
  • EBITDA margin at 10.6%; excluding one-off impact margin would have been 13.5%. Company has provided support of Rs 110 crore to dealers to liquidate BS-4 vehicle; 10,000-15,000 per vehicle. Company has also provided for fiscal benefits to the tune of Rs 67 crore
  • Company has maintained market share in entry and deluxe segment; newly launched Xtreme 160R would improve its position in premium segment. Hero will start dispatch Xtreme 16R in couple of weeks time
  • Brought down the dealer inventory by 5.5 lakh units during this financial year
  • All pants are now operation and volumes are getting ramped up gradually. Raw materials are available from vendors; 90% outlets are open now
  • Many of the dealers have reached 70-80% pre-Covid volume
  • Demand is gradually picking up; enquiries have increased and conversion rate is very good
  • Financing penetration has increased. Financed portion for FY20 was 46% vs 41% in FY19; 40%+ for Q1FY21. Liquidity position is strong in Hero FinCorp as the company recently raised money
  • 43% of Hero’s sales in FY20 went through financing and out of that Hero FinCorp’s share was 46% 
  • Hero has increased prices in the month of May to improve dealer margin
  • Labor availability has been improving as migrants workers are flowing back 
  • Rural and semi urban likely to perform better than urban market this year. Close to 50% business comes from rural India
  • Hero started this financial year with 5.5 lakh BS-6 vehicle inventory
  • Company has reduced its capex guidance for FY21 to Rs 600 crore from Rs 1,000 crore projected earlier but not reduced R&D expenses
  • Market share in scooter segment will improve in FY21 as newly launched product has received good response and many new products are lined up for launch
  • Spare parts revenue for Q4FY20 was Rs 751 crore and for FY20 was Rs 2,896 crore
  • All the BS-4 vehicle at dealers level have been sold
Also Read on FinMedium:  Concall Summary: JM Financial Ltd Q4FY20

Read more concall summaries here.

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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