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Hero Honda (Q4 FY11)

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India Infoline Research Team / 10:32 , May 05, 2011

CMP Rs1,600, Target Rs1,680, Upside 5.0%

  • Revenues rise 31% yoy due to 22.6% yoy growth in volumes and 7% higher realizations
  • Higher raw material costs owing to higher commodity prices and increased overheads led to 516bps yoy fall in OPM to 12.1%
  • Higher production from Uttaranchal plant results in lower effective tax rate
  • Key concerns: R&D capabilities following exit of Honda, sustenance of margins
  • Maintian Market Performer rating with a 9-month price target of Rs1,680 (P/E of13x FY13E EPS)  
Result table
(Rs m) Q4 FY11 Q4 FY10 % yoy Q3 FY11 % qoq
Volume 1,454,431 1,186,536 22.6 1,428,030 1.8
Realisation 37,066 34,742 6.7 36,145 2.5
Net sales 53,909 41,223 30.8 51,617 4.4
Material costs (39,269) (27,684) 41.8 (38,149) 2.9
Personnel costs (1,680) (1,460) 15.1 (1,561) 7.7
Other overheads (6,432) (4,962) 29.6 (6,141) 4.7
Operating profit 6,528 7,117 (8.3) 5,766 13.2
OPM (%) 12.1 17.3 (516) bps 11.2 94 bps
Depreciation (603) (487) 23.9 (560) 7.7
Interest (81) 45 (281.2) 52 (255.2)
Other income 743 695 7.0 620 19.8
PBT 6,588 7,370 (10.6) 5,879 12.1
Tax (1,572) (1,382) 13.7 (790) 98.9
Effective tax rate (%) 23.9 18.8
13.4
Adjusted PAT 5,016 5,988 (16.2) 5,088 (1.4)
Adj. PAT margin (%) 9.3 14.5 (522) bps 9.9 (55) bps
Extra ordinary items - - - (798) -
Reported PAT 5,016 5,988 (16.2) 4,290 16.9
Ann. EPS (Rs) 100.5 119.9 (16.2) 101.9 (1.4)
Source: Company, India Infoline Research

Volume breakup
As a % of net sales Q4 FY11 Q4 FY10 % yoy Q3 FY11 % qoq
Domestic




<125cc 1,219,395 1,028,850 18.5 1,210,795 0.7
>125cc and <250cc 102,687 68,636 49.6 88,315 16.3
Scooters 102,685 64,658 58.8 90,441 13.5






Exports




<125cc 20,800 20,124 3.4 30,027 (30.7)
>125cc and <250cc 2,310 2,476 (6.7) 3,804 (39.3)
Scooters 6,554 1,792 265.7 4,648 41.0






Total 1,454,431 1,186,536 22.6 1,428,030 1.8
Source: SIAM

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