Hero Motocorp (Q1 FY14)

India Infoline News Service | Mumbai |

Domestic scooter volumes for HMCL continue to grow in healthy manner and it market share in this segment hovered at ~21% (+600bps improvement since Q1 FY13).

CMP Rs1,758, Target Rs1,910, Upside 8.7%

  • Revenues remain flattish (-1.4% yoy) as weak volumes were offset by realization growth (3.8% yoy). However realizations declined 2% qoq on back of poor product mix. 
  • Margins at 14.9% were ahead of expectations mainly owing to lower marketing spends.
  • PBT came in ahead of our estimates but higher than estimated tax outflow resulted in an in-line PAT of Rs5.48bn
  • Tax rate was higher at 26.9%, on back of part reduction of tax benefit at Pantnagar and additional surcharge element introduced in the FY14 budget. 
  • Downgrade to MP with a revised 9-month price target of Rs1,910 
Result table
(Rs m)
Q1 FY14
Q1 FY13
% yoy
Q4 FY13
% qoq
Volume
1,559,282
1,642,292
(5.1)
1,527,351
2.1
Realisation
39,502
38,040
3.8
40,238
(1.8)
Net sales
61,595
62,473
(1.4)
61,458
0.2
Material costs
(44,556)
(46,026)
(3.2)
(44,395)
0.4
Personnel costs
(2,215)
(2,046)
8.2
(2,259)
(1.9)
Other overheads
(5,672)
(5,032)
12.7
(6,306)
(10.0)
Operating profit
9,152
9,369
(2.3)
8,498
7.7
OPM (%)
14.9
15.0
(14) bps
13.8
103 bps
Depreciation
(2,744)
(3,035)
(9.6)
(2,655)
3.3
Interest
(30)
(29)
0.8
(31)
(3.8)
Other income
1,123
1,044
7.5
1,045
7.4
PBT
7,501
7,349
2.1
6,857
9.4
Tax
(2,016)
(1,194)
68.8
(1,115)
80.8
Effective tax rate (%)
26.9
16.3
1062 bps
16.3
1062 bps
PAT
5,486
6,155
(10.9)
5,742
(4.5)
PAT margin (%)
8.9
9.9
(95) bps
 

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