The Telegraph
Since 1st March, 1999
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Company Report


Hero Honda finished the year with total revenues of Rs 5,194.58 crore (Rs 4539.49 crore), up 14 per cent from the previous year. However, this is considerably lower than the 42 per cent growth in income it had reported in the previous year.

The total spending went up by 13 per cent, while the net profit was up by 25 per cent over the corresponding previous period against 88 per cent growth in profits it had reported during that period. Despite a 19 per cent growth in volumes, income from operations went up by 14 per cent over the corresponding previous quarter to Rs 5,101.71 crore (Rs 4,465.43 crore).

During the year, the company sold 16,77,535 units against 14,12,279 units during the year-ago period. Some of its best selling products have been facing the heat of competition.

Margins saw only a slight improvement with operating profit rising 27 per cent over the corresponding previous period to Rs 848.65 crore (Rs 670.70 crore), while OPM nudged up to 17 per cent from 15 per cent reported last year.

Other income was up 25 per cent from the same period in the previous year at Rs 92.87 crore (Rs 74.06 crore). Net interest income also went down to Rs 1.02 crore against Rs 1.15 crore reported during the previous year.

Depreciation was up 14 per cent at Rs 57.98 crore (Rs 51.01 crore). With a 31 per cent rise in the tax provision, net profits registered a rise of 25 per cent at Rs 580.76 crore (Rs 462.93 crore).

Hero Honda’s fourth quarter performance has been disappointing with a 3 per cent year-on-year and 12 per cent sequential decline in sales at Rs 1,215.40 crore (Rs 1,255.50 crore).

A tighter cost control saw margins improve on a year-on-year basis with operating profits going up 2 per cent over the corresponding previous quarter at Rs 204.42 crore (Rs 200.64 crore). Sequentially, however, it was 10 per cent from the Rs 228.06 crore it earned in the December quarter.

Hero Honda’s OPM was held at 17 per cent in the last 4 quarters, while net profit was down 2 per cent over the year-ago period and 3 per cent sequentially at Rs 148.96 crore (Rs 152.56 crore).

The stock currently trades at Rs 213 discounting its fiscal 2002-03 EPS of Rs 29.08 by seven times. The slowdown in its growth rates is evident from its results and unless there is a reversal of this trend, valuations are bound to remain depressed.

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