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May 03, 2012, 03.04 PM IST
CRISIL Research has come out with its report on Hero MotoCorp. The research firm has maintained the fundamental grade of 5/5 to the company in its May 2, 2012 report.
CRISIL Research has come out with its report on Hero MotoCorp . The research firm has maintained the fundamental grade of 5/5 to the company in its May 2, 2012 report.
Hero MotoCorp’s Q4FY12 earnings were largely in line with CRISIL Research’s expectations. As expected, revenues remained flat q-o-q primarily on account of muted volume growth in two-wheelers despite a marginal price hike. Adjusted PAT fell marginally q-o-q driven by tepid revenue growth, higher raw material costs and tax outgo. CRISIL Research expects growth in the domestic two-wheeler industry to moderate and competition to intensify in FY13. However, we remain positive on Hero MotorCorp’s long term growth due its strong presence in the rural markets and maintain our fundamental grade of 5/5.
Q4FY12 result analysis
• Raw material cost as a percentage of sales grew 65 bps q-o-q (up ~72 bps y-o-y) to 74% on account of increase in the price of its key raw material - steel. Employee cost declined 4% q-o-q while depreciation & amortisation was down ~6% q-o-q. EBIT margin remained flat q-o-q at 10.8%.
• On account of muted revenues, higher raw material costs and tax outgo, adjusted PAT declined 1.5% q-o-q to Rs 6.0 bn with EPS of Rs 30.2. The company announced a dividend of Rs 45 per share in FY12, which translates into a dividend payout of ~44%.
Key takeaways from the conference call
Valuation: Current market price has downside
Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.
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