Quantamental Equity Research Report | Release: 13 Feb 2019 12:04:59 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR

| Exchange:XNSE/XBSE NSE CODE:HEROMOTOCO and BSE CODE:500182

HERO MOTOCORP LTD
Last Close: INR 2799.55 Fair Value: INR 2164.4 Est. Price by Mar 19: INR 3266 Market Capitalization (INR Crs): 55,915 Industry: 2/3 Wheelers
Company Profile Fundamentals (Historical and Estimated) UPSIDE
Investment/Disinvestment Rationale Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E 17%
Hero MotoCorp is a two-wheeler manufacturer. The Company manufactures and sells motorized two Price 1941 1714 2107 1517 2222 2476 2980 3231 3732 3266 3598 3909 4194 4446 Capital Asset Pricing Model
wheelers up to 350 cubic centimeters (cc) engine capacity, spare parts and related services.
Return on Equity 64% 65% 55% 42% 38% 36% 36% 33% 31% 26% 25% 24% 23% 22% Beta 0.98
Price to Earning 17.4 17.8 17.7 14.3 21.0 20.7 18.8 19.1 20.2 18.4 18.4 18.4 18.4 18.4 Risk Free Rate 7.38%
Title Mar-18 Mar-19 E Mar-20 E EVTI 2.2 1.5 1.6 1.1 1.6 1.6 1.9 2.0 2.0 1.6 1.5 1.5 1.5 1.5 Market Risk Premium 7.27%
Sales 32,230.49 35,089.22 37,862.05 EVTIFM 17.4 17.8 17.7 14.3 21.0 20.7 18.8 19.1 20.2 18.4 18.4 18.4 18.4 18.4 Equity Mix 100%
EBITDA 5,806.01 5,975.59 6,447.79 Price to Book Value 11.2 11.6 9.8 6.1 7.9 7.6 6.7 6.4 6.3 4.8 4.6 4.4 4.2 4.0 Debt Mix 0%
EBIT 5,250.41 5,370.71 5,916.49 Debt to Equity 0.0 0.2 0.2 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cost of Equity 15%
PBT 5,244.16 5,370.71 5,916.49 Dividend Yield 6% 6% 2% 4% 3% 2% 2% 3% 3% 3% 3% 3% 3% 3% Cost of Debt 0%
NPAT 3,697.36 3,545.20 3,905.47 Cash Flow to Firm 10% 12% 1% 6% 8% 4% 6% 8% 7% 10% 10% 10% 10% 10% WACC 15%
Price to Earning 20.16 18.40 18.40 Growth Per Share Share holding pattern
Price to Book Value
Debt to Equity
6.33
-
4.82
-
4.64
- Revenue %
1-Year
13%
3-Year
60%
5-Year
74%
(A) Promoter & Promoter Group
(B) FII/FPI
34.63
39.95
BUY
Return on Equity 0.31 0.26 0.25 EBIT % 13% 57% 107% (C) DII/Insurance Companies 15.37 DCF Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E
Enterprise Value to Total Income (EVTI) 2.05 1.55 1.54 Earnings % 9% 55% 75% (D) Public holding < 2 lakhs of cap. 6.00 Cash Flow After Tax 3,944 4,256 4,551 4,823 5,064
Enterprise Value to Total Income to Firm Margin(EVTIFM) 21.10 18.38 17.92 Book Value % 16% 80% 135% (E) Others 4.05 Terminal Cash Flow Value at the end of 5 years 55,366
Price or Est. Share Prices 3,732.16 3,266.00 3,597.90 Stock Total Return % 16% 51% 146% Grand Total 100.00 Total Fair Value of the Firm's Equity (Discounted Cash Flow Method) 43,228

Mar Cap Annualized Latest Growth Rate Ann Total Unpledged QoQ Sales Qtr Sales QoQ Qtr Profit Graham's
S.No Name CMP Rs. B.V. Rs. ROCE % Latest EVTI CMP / BV P/E Debt / Eq Div Yld % SGR % PQEIOI
Rs.Cr. ROE % EVTIFM R% Income Prom Hold % % Var % Profits % Var % Number Rs.
1 Maruti Suzuki 7,162.50 216,365 1,382.33 17.39 23.98 2.20 73.71 5.18 28.52 - 1.12 11.95 242.37 82,342 56.21 378 -12.33 2.00 -33.53 -17.22 2,794.94
2 Bajaj Auto 2,832.35 81,959 704.48 29.99 30.96 1.95 22.80 4.02 17.46 0.01 2.12 17.65 -151.45 31,996 49.30 130 -7.52 16.00 -2.85 20.49 1,603.43 www.researchwings.in
3 TVS Motor Co. 490.35 23,297 60.63 30.95 24.09 1.20 29.64 8.09 33.19 0.41 0.67 23.63 56.69 18,659 57.40 131 -6.60 26.10 -15.58 15.57 141.99 fb.com/researchwings
4 Eicher Motors 21,137.50 57,652 2,867.26 37.61 49.40 5.04 34.15 7.37 27.20 0.02 0.52 31.85 -426.96 10,119 49.35 167 -2.79 3.18 -2.88 2.39 7,081.86 m.me/researchwings
5 Hero Motocorp 2,799.55 55,915 635.14 31.66 46.10 1.50 20.21 4.41 15.44 - 3.39 15.42 93.93 32,210 34.63 96 -13.49 7.53 -21.22 -4.51 1,609.89 t.me/researchwings
6 Atul Auto 291.45 640 99.98 37.90 33.61 0.75 9.69 2.92 12.06 - 1.80 28.45 36.79 752 52.70 45 5.47 44.28 7.98 66.08 233.18 twitter.com/researchwings

LONG TERM INVESTMENT FUNDAMENTAL STRATEGY

Enterprise Value is Market Capitalisation Add: Debt Less: Non Current Investments
Firm Profits is Net Profit Add: Interest Less : Tax Savings on Interest Less : Other Income
Total Income is Sales Add: Other Income
Firm Margin is Firm Profits divided by Total Income
Enterprise Value to Total Income is Enterprise Value divided by Total Income (below 2 is better)
Enterprise Value to Total Income to Firm Margin is Enterprise Value to Total Income divided by Firm Margin (below 15 is
investments friendly)
Historically have observed that company's with Enterprise Value to Total Income to Firm Margin less than 15 have
outperformed the market and also have delivered return over and above 25% annually.

LONG TERM INVESTMENT TECHNICAL STRATEGY - WEEKLY MOVING AVERAGE

Green line is 200 weeks moving average of close, Blue line is 200 weeks moving average of low and Red line is 100 weeks
moving average of close
Condition: Green line should be above red line and price should be above green line
Buy once the price is above green line and fulfills the condition.
It has been observed historically that once the stock crosses this specific technical analysis parameter, the stock tend to
deliver more than 100% returns and subsequently delivering significantly higher returns.

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