Dolat Capital is bullish on Hero Motocorp and has recommended buy rating on the stock with a target of Rs 2230 in its October 23, 2012 research report.
“Hero Motocorp reported top-line revenue at Rs51.8bn, down 11% YoY led by a 14% decline in volume growth. The company sold 1.33mn two wheelers against 1.54mn sold in same quarter previous year. It had taken a one-time inventory adjustment in September 2012. Operating margins decline 110bps QoQ to 13.9%. The company’s operating margins declined 110bps YoY to 13.9% because of higher other expenses. EBIDTA for the quarter was Rs7.2bn, down 22% YoY versus our expectation of Rs7.8bn. PAT reported at Rs4.4bn in 2QFY13. The company reported its PAT at Rs4.4bn, down 27% YoY.”
“The company re-launched all its bikes under the new brand name “Hero” during this quarter. It also launched these new bikes in Srilanka and Nepal. Apart from that, the company has newly launched Impulse, Ignitor and Maestro. It has planned a capex of Rs25bn over the next 18-24 months to add new capacity in its two plants at Rajasthan and Gujarat. The total capacity addition will be ~2.2mn and take its total capacity to 9mn by end of FY14. Also, it has planned to enter Africa and Latin America by end of this calendar year. With the recent underperformance, we believe it’s the best bet in the two wheeler segment. The stock is currently trading at 12.9xFY14 EPS. We maintain Buy,” says Dolat Capital research reports. FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment
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