Why this two-wheeler stock is poised to do well despite pressure on volumes

In the coming quarters, volume growth will largely depend upon the impact of the second wave of the pandemic.

Synopsis

The operating margin before depreciation and amortisation (EBITDA margin) of India’s largest two-wheeler maker expanded by 100 basis points year-on-year to 13.9% in the March quarter.

ET Intelligence Group: Despite raw material inflation, Hero MotoCorp reported better than expected operating margin for the March quarter aided by higher realisation and cost saving measures. While falling demand amid the second wave and a sustained increase in input costs may limit the upside for the stock, the earnings downgrade may be restricted to lower single digit given higher profitability of operations.

The operating margin before

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