Hero Motocorp up 5% as Q4 earnings surprise

Two-wheeler major Hero MotoCorp shares rallied more than five percent in early trade Monday, after the company's fourth quarter numbers announced Friday were better than analyst estimates.

Net profit declined a lower-than-expected 5 percent year-on-year to Rs 574 in January-March quarter FY13. Quarterly revenue too was above street estimates, rising 2 percent from a year ago to Rs 6,146 crore.

Analysts on average had expected a net profit of Rs 493 crore on revenue of Rs 6,020 crore, according to a CNBC-TV18 poll.

Hero's EBITDA margin in the quarter improved to 13.83 percent. Margins had hit a two-year low of 12.6 percent in Q3.

Meanwhile, the maker of Splendor, Passion motorcycles and Pleasure, Maestro scooters has increased prices across its brands. The price hike will be in the Rs 500-1,500 range and will come into effect immediately.

Kotak Securities has maintained  its 'Add' rating on the stock.

"We expect two wheeler industry growth to revive if monsoons are normal. All current estimates on monsoon indicate it is likely to be normal this year which we believe could boost two wheeler demand. We expect Hero Motocorp to lose market share but expect pricing to remain stable as we believe industry growth will revive," said the Kotak note.

Jefferies recommended a buy rating on the stock with a target price of Rs 2119.

"The company reported strong margins, a weaker yen and lower commodity prices could boost margins further," Jefferies report said.

At 09:27 hours IST, the stock was quoting at Rs 1,677, up 5.01 percent.