- Company’s 3QFY12 revenue increase at 17% yoy and EBITDA at 31% yoy are in line with market expectations.
- EBITDA margin at 15.8% up 170 bps yoy and 10 bps down qoq has also been line with market estimates.
- Company could offset higher raw material cost by lower other operating expenses.
- Depreciation increase of 7% is due to weakness in rupee against JPY.
- Domestic motorcycle volume increased 11% yoy against industry growth rate of 9%, translating in to market share gain of 125 bps yoy.
- Company showed healthy improvement in all operating parameters yoy. Sequentially, the margins are slightly down due to seasonality and change in product mix.
- 4QFY12 volume growth is expected to be similar to that of 3Q.
- Honda’s entry in to 100 cc bikes has been a significant overhang on the stock. However, the brand equity and distribution edge enjoyed by the company would help limit market share loss.
- Market share gain in 125 cc bikes and scooter segment will limit the market share loss in the two wheeler segment.
Daily 'Jungle book' for indian stock market.... disclaimer: Use your own risk to invest in market.
Friday, January 20, 2012
‘Buy’ Hero Motocorp – TP Rs.2050
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