Hero Moto bouncs back

Hero Motocorp was on the downward spiral yesterday as its monthly sales numbers for July’15 were very muted. Now today, the stock has bounced back and is up in the green at Rs.2763 levels, a rise of 2.5% with an intra day high of Rs.2800.

This sudden change of moods is on account of the encouraging Q1FY16 numbers which were announced yesterday. The company has shown a good 33% (YoY) rise in net profit at Rs.750 crore though total income remained flat at Rs.6955 crore. Total costs have come down – for current Q1 it stood at 86% of total sales v/s 91% in previous Q1.

Consequently, EBITDA for the quarter rose 11% at Rs.1048 crore while margins came in pretty healthy at 15.1% v/s 13.5%. Though the company is optimistic about the coming months, a lot hinges on the monsoon and ensuing rural income. The company has lined up many new launches for the oncoming festive season but for now, TVS seems to be on a much better road and it has consistently, month after month, reported an increase in its sales.