Concall Summary: Hero MotoCorp Q4FY20

Reading Time: 2 minutes

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