Hero Motocorp (Q2 FY14)
India Infoline News Service | Mumbai |
During Q2 FY14, HMCL volumes witnessed 6.3% yoy increase. Realizations also grew 3.9% yoy on back of price hikes implemented through the year, better product mix and higher spare part sales.
CMP Rs2,084, Target Rs2,300, Upside 10.4%
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Revenue growth was at 10.4% driven by 6.3% volume growth led by scooters, realizations were higher by 3.9% owing to better product mix with higher contribution from scooters and premium motorcycles along with jump in spare part revenues
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Margins at 14.5% were lower than our expectations mainly owing to higher than estimated overheads
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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
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Cost cutting initiatives to drive cost reduction of an estimated annualized rate of Rs15bn by FY18
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Upgrade to BUY with a revised 9-month price target of Rs2,300
| (Rs m) |
Q2 FY14 |
Q2 FY13 |
% yoy |
Q1 FY14 |
% qoq |
| Volume |
1,416,211 |
1,332,805 |
6.3 |
1,559,282 |
(9.2) |
| Realisation |
40,433 |
38,921 |
3.9 |
39,502 |
2.4 |
| Net sales |
57,262 |
51,875 |
10.4 |
61,595 |
(7.0) |
| Material costs |
(40,955) |
(37,702) |
8.6 |
(44,556) |
(8.1) |
| Personnel costs |
(2,290) |
(1,922) |
19.2 |
(2,215) |
3.4 |
| Other overheads |
(5,690) |
(5,059) |
12.5 |
(5,672) |
0.3 |
| Operating profit |
8,327 |
7,192 |
15.8 |
9,152 |
(9.0) |
| OPM (%) |
14.5 |
13.9 |
68 bps |
14.9 |
(32) bps |
| Depreciation |
(2,869) |
(2,895) |
(0.9) |
(2,744) |
4.6 |
| Interest |
(30) |
(30) |
0.3 |
(30) |
0.2 |
| Other income |
1,155 |
993 |
16.2 |
1,123 |
2.9 |
| PBT |
6,583 |
5,261 |
25.1 |
7,501 |
(12.2) |
| Tax |
(1,769) |
(855) |
106.9 |
(2,016) |
(12.2) |
| Effective tax rate (%) |
26.9 |
16.3 |
|
26.9 |
|
| PAT |
4,814 |
4,406 |
9.3 |
5,486 |
(12.2) |
| PAT margin (%) |
8.4 |
8.5 |
(9) bps |
***Note: This is a
NSE Chart
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