Hero Honda Q3 profit seen up 5.2% at Rs 563 cr

India's largest two-wheeler maker Hero Honda is set to report profit after tax of Rs 563 crore, up 5.2% as compared to Rs 535 crore in same quarter the previous year. 

Revenues are seen going up by 32% at Rs 5,036 crore from Rs 3,826 crore. However, operating profit margin is likely to be declined at 13.5% versus 17.2% (YoY). Company sold 14.28 lakh units in third quarter of FY11, a growth of 28.5% as compared to 11.11 lakh units in same period of FY10. What to watch out for : -Revenue growth due to strong improvement in Volumes of 28.5% YoY and 8% QoQ 
-Expect margins to drop on YoY basis due to raw material concerns but expect a sequential slight improvement due to better capacity utilisation
-Realizations are expected to improve by 2.7% YoY (nearly 0.5% QoQ) due to higher contribution from Haridwar (nearly 34.6% of volumes expected in 3QFY11 versus 33.3% in 3QFY10 and 33.5% in 2QFY11) and price increases during the quarter. Watch out for commentary on : -Post Hondas new arrangement, royalty to lower from January 2011
-The new arrangement, after Honda