Hero Honda Q4 PAT seen down 13% at Rs 519 cr
India's largest two-wheeler manufacturer Hero Honda is set to report disappointing earnings in fourth quarter FY11 on the back of decline in margins. According to CNBC-TV18 estimates, the company is likely to report profit after tax of Rs 519 crore, degrowth of 13.2% as compared to Rs 598.8 crore in fourth quarter FY10.
India's largest two-wheeler manufacturer Hero Honda is set to report disappointing earnings in fourth quarter FY11 on the back of decline in margins. According to CNBC-TV18 estimates, the company is likely to report profit after tax of Rs 519 crore, degrowth of 13.2% as compared to Rs 598.8 crore in fourth quarter FY10.
Revenues are seen going up by 28.3% to Rs 5,290 crore in January-March quarter as against Rs 4,122.3 in same quarter the previous year.Operating profit margin is seen declining at 11.5% versus 17.2% on year-on-year basis.On quarter-on-quarter basis, profit after tax is expected to grow by 21% and revenues by 2.5%. Even there may be slight improvement in operating profit margin.There was an exceptional item of Rs 80 crore in quarter ended December 2010 as a provision made for probable claims to be paid out of dispute arising over excise duty with Uttaranchal government.What to watch out for:
-Volumes are expected to grow 27%, which will drive revenue growth in the quarter
-Margins to be hit by higher raw mat cost and higher spending on advertising and sales promotion
-Profits will decline 14% due to sharp decline in margins
-Realizations will improve due to price increases if Rs 500 to 1000 taken in December and March 2011
-After the split with Honda, Hero Honda needs to address challenges related to new product development, brand transition, developing export markets and maintaining its market share.
-Besides, it needs to build a fourth plant to meet demand and maintain market share.
-Has not explicitly stated the royalty amount but Honda Motors has stated that post the JV termination, will pay royalty of Rs 2500 crore over next 3 years, amounting to about 3% of sales. Operation metrics Q4FY11 Total volume jumped 22.6% to 14.54 lakh units in March quarter as against 11.86 lakh units in same period last year.Net realization per vehicle went up by 4.3% on year-on-year basis to Rs 36,231 and raw material cost per vehicle increased 15.4% to Rs 26,919 during same period.In the financial year 2010-11, Hero Honda is expected to report 21.5% growth in revenues of Rs 19,151 crore while profit after tax is seen declining 10.4% to Rs 1,999 crore. Operating profit margin too is seen falling at 11.6% as against 16.9%.Total volume went up by 17.4% to 54.02 lakh units in FY11 as against 46 lakh units. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
