Hero Moto Beats Estimate, but Stock Seen Rangebound
rising raw material prices, which affect the company with a lag of three-six months. Steel prices have firmed up 25% in the December quarter and bills raised by vendors in the near term will be based on the higher prices.
In a conference call, the company’s management said that while the demand is recovering, it has still not normalised. It expects single-digit volume growth in the next fiscal.
At Thursday’s closing price of ₹ 3,264.3, the stock was trading at 16.1 times FY18 projected earnings, whichisan8.4%premiumtoitslongterm average price multiple. The lower P/E premium captures hazy volume visibility in the near term.