HERO HONDA MOTORS
After a subdued March quarter, Hero Honda has managed to turn out a better performance for the first quarter with total revenues of Rs 1,359.82 crore up 5 per cent from Rs 1,290.40 crore in the same period last year and 9 per cent over the March quarter revenue of Rs 1,248.20 crore. Against this, the total spending went up by 4 per cent over the corresponding quarter to Rs 1,202.00 crore (Rs 1,151.24 crore). Net profit rose by 13 per cent on a year-on-year (YoY) basis to Rs 157.82 crore (Rs 139.16 crore).
Hero Honda has been facing some stiff competition from its rivals, especially Bajaj Auto, the result of which is a decent growth in volumes (9 per cent YoY and 16 per cent sequentially). But there was no commensurate growth in income from operations. Net sales at Rs 1,323.72 crore (Rs 1,274.37 crore) was up 4 per cent on a YoY basis and 6 per cent sequentially against Rs 1,215.40 crore in the March quarter.
Putting lower priced models on the shelf has seen realisations shrink. The net realisation at Rs 28,853.11 was 5 per cent down YoY. At Rs 1,110.28 crore (Rs 1,063.00 crore) the operational cost was up 4 per cent on a YoY basis.
Decreasing realisations and increasing operational costs have squeezed HHML’s margins in the June quarter. Operating profit at Rs 213.44 crore (Rs 211.37 crore) rose by just about a percentage point over the corresponding quarter while sequentially it was up by only 4 per cent from the March quarter profit of Rs 204.42 crore.
After having maintained a consistent OPM of 17 per cent for the last four quarters OPM fell to 16 per cent during the current quarter.
Other income at Rs 36.10 crore (Rs 16.03 crore) was up 125 per cent over the same period last year. Depreciation stood at Rs 15.19 crore (Rs 13.49 crore).
With a 2 per cent YoY and 7 per cent sequential rise in the tax provisioning the company’s net profit was Rs 157.82 crore (Rs 139.16 crore) up 13 per cent from the same period last year and 6 per cent up from the March quarter profit of Rs 148.96 crore. A big part of increased profits was higher other income.
The stock has been rising consistently since end of March and is currently trading at Rs 263.40 discounting its June quarter annualised EPS of Rs 31.61 by eight times.