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%
 
  • 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

  • Margins at 14.5% were lower than our expectations mainly owing to higher than estimated overheads

  • 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

  • Cost cutting initiatives to drive cost reduction of an estimated annualized rate of Rs15bn by FY18 

  • Upgrade to BUY with a revised 9-month price target of Rs2,300  

Result table
(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
BSE 3,520.00 6.95 (0.20%)
NSE 3,514.85 [4.70] ([0.13]%)

***Note: This is a NSE Chart

 

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