Hero Motocorp Q1 PAT seen up 13% at Rs 630 cr

Country's largest two-wheeler manufacturer Hero Motocorp is set to declare its first quarter earnings today. Analysts on an average expect a growth of 13% year-on-year and 4.4% quarter-on-quarter in profit after tax of Rs 630 crore for the quarter ended June 2012, according to CNBC-TV18 estimates.

Revenues of the company are seen going up by 12% YoY and 5.5% QoQ to Rs 6,370 crore during the quarter. Growth in revenues was due to 7.5% volume growth and 5% YoY growth in average realisations.

Average realisation was up by 2% QoQ and 5% YoY due to the price hike of Rs 500-1000 in May. However, the management had indicated that this is not sufficient to cover for higher raw material cost.

Benefit of price increase and operating leverage is diluted by adverse impact of weaker rupee against Yen (on both raw material cost and royalty). In the quarter ended March 2012, margin growth was restricted due to raw material cost and depreciation in rupee.

In the first quarter of FY13, company volumes benefitted from seasonal wedding driven demand, new launches (Mastro Scooter) and shift in trend in fuel efficient bikes.

EBITDA is expected to be at Rs 950 crore in the April-June quarter as against Rs 817.7 crore in a year ago period and Rs 925.3 crore in the previous quarter.

Analysts expect operating profit margin to be improved at 14.9% versus 14.3% YoY, but that to be declined QoQ from 15.3%. Depreciation included a royalty amortisation of Rs 200 crore).
 
Hero Motocorp has outperformed its both rivals Bajaj Auto and TVS Motor in terms of volume growth.

Total volumes during the quarter went up by 7.5% YoY and 6% QoQ to 16.42 lakh units. It has been reported sales of 5 lakh plus per month for last 10 consecutive months.

During the same quarter, Bajaj Auto's volumes fell by 1.3% YoY to 10.78 lakh units and TVS Motor's was down by 3.2% to 5.19 lakh units.

Two-wheeler major's volume for the previous financial year 2011-12 shot up by 15.4% to 62.35 lakh units from 54 lakh units in previous year. 

Overall the company is likely to report double digit earnings growth this quarter. Profitability is likely to improve despite royalty cost, inflation and currency depreciation.

In the last quarter, results were stable but stock fell 7% as company lowered dividend significantly to Rs 45 per share. Hero Motocorp had cut dividend payout from 100% in FY11 to 38% in FY12 that was its strategy to conserve cash.