OTHER GROUP COMPANIES
market

Hero Motocorp (Q3 FY14)

HMCL reported an OPM of 13.1% in Q3 FY14 reflecting an improved yoy performance (+47bps yoy). However, the margins were lower on a sequential basis by 149bps.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs2,002, Target Rs2,350, Upside 17.4% 
  • Revenue growth was at 11.1% driven by 6.9% volume growth led by scooters, realizations were higher by 4% owing to better product mix with higher contribution from scooters along with price hikes implemented over the past four quarters

  • Margins at 13.1% were lower than our expectations mainly owing to higher than estimated ad spends and unfavorable currency

  • Tax rate was higher at 26.8%, on back of part reduction of tax benefit at Pantnagar and additional surcharge element introduced in the FY14 budget

  • Cost cutting initiatives to add an estimated 300bps to margins by FY17

  • Maintain BUY with a 9-month price target of Rs2,350 

Result table
(Rs m)
Q3 FY14
Q3 FY13
% yoy
Q2 FY14
% qoq
Volume
1,680,940
1,573,135
6.9
1,416,211
18.7
Realisation
40,910
39,333
4.0
40,433
1.2
Net sales
68,768
61,876
11.1
57,262
20.1
Material costs
(49,991)
(45,854)
9.0
(40,955)
22.1
Personnel costs
(2,439)
(1,982)
23.0
(2,290)
6.5
Other overheads
(7,360)
(6,253)
17.7
(5,690)
29.4
Operating profit
8,978
7,786
15.3
8,327
7.8
OPM (%)
13.1
12.6
47 bps
14.5
(149) bps
Depreciation
(2,732)
(2,832)
(3.5)
(2,869)
(4.8)
Interest
(30)
(30)
0.7
(30)
0.7
Other income
956
901
6.1
1,155
(17.2)
PBT
7,171
5,826
23.1
6,583
8.9
Tax
(1,922)
(947)
103.0
(1,769)
8.6
Effective tax rate (%)
26.8
16.3

26.9

PAT
5,250
4,879
7.6
4,814
9.0
PAT margin (%)
7.6
7.9
(25) bps

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