Hero MotoCorp is the world’s largest 2-wheeler manufacturer and they have given a surprise for the first quarter.
Hero MotoCorp reported an amazing 130 percent growth in consolidated net profit of 12th August 2022 at Rs 590 crore. Considering the effects of Coronavirus and lockdowns are slowing wearing off our economy, it seems that people have shifted back to work in office. The growth in the net profit shows us that public demand has shifted to private motor vehicles over public transport.
Consolidated revenue has risen by 53 percent to Rs 8448 crore in comparison with Rs 5503 crore in the same quarter of the last financial year.
The main reasons behind the fantastic growth are due to high sales volumes and efficient realizations which were aided by the spares segment and lower export volumes.
Niranjan Gupta, the Chief Financial Officer said that “The fiscal year began on a positive note for the industry, with growth over not only last year but sequentially over Q4FY22 as well. While the macro-economic environment globally is facing headwinds of inflation, Indian economy is relatively better placed to move on path to recovery and growth”. He expects the margin pressures will ease in the forthcoming months as the prices of commodities are cooled down.
The company’s standalone EBITDA for the first quarter increased by 83 percent on year to Rs 941 crore.
Hero MotoCorp will soon launch their highly anticipated electric vehicle (EV) in the coming festivals. The company has been associating with its partners for the EVs and the set-up of charging stations.
Let us take a look at the technical analysis of Hero MotoCorp. The price had faced heavy resistance at the 61.8% retracement level of Rs 3092 since August 2020 to February 2021. The price could not breakout this level and slipped down in March 2021. After the correction of 2022 due to Putin’s war, the price seems to be recovering and faces resistance at the 50% retracement level. Considering the great earnings of the past quarter, the stock might move up to the 61.8% retracement level again and form a double top which can be an exit for the swing trade. The monthly MFI is at 60 on 16th August 2022, which means the stock is not overbought but its close enough.
Multiple giant brokerage firms have given this stock a target of Rs 3000 to Rs 3200 in the coming months. However, this seems very unlikely for the month of August 2022 as the stock will face heavy resistance at Rs 2900 and Rs 3000 due to operator presence on the call options of HEROMOTOCO 25-Aug-2022 CE 2900 and HEROMOTOCO 25-Aug-2022 CE 3000. The swing trade might need some months or may not work.
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