-------- Forwarded Message --------
Subject: Hero Moto Corp: Q2FY16 Result Is Slightly Better Than Street
Estimates
Date: Wed, 21 Oct 2015 09:05:00 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
*Only Sustaining Above 2630-2650, Expect Some Fireworks Up to 2800-3000*
Q2 PAT at Rs.772 Cr, up by 1.1% YOY (median estimate 717 cr)
Q2 EPS at 38.66 against street estimates of 35.65
*CMP:2606*
*Buy: 2600-2580*
*TGT: 2650-2678-2705-2750-2795 (T+5)*
*TGT: 2920-3030-3165-3275 & 3500-4300 (1-12 & 24M)*
*TSL<2550*
Note: Consecutive closing below 2550 for any reason, HMC can fall up to
2497-2435, where it may be again accumulated for better investment
buying average.
*Some key takeaways:*
Q2FY16 result of HMC published yesterday after market hours was slightly
above street expectations. Although net sales declined by 1.72% YOY
(against expectation of -6.96%),EBITDA/bottom line was improved by
higher realisations per unit aided by reduced input costs and better
internal cost control measures (LEAP). As a result, realisations per
unit & EBITDA improved by 5.6% and 15.9% (YOY).
Weak rural demand amid fragile rural economy and uneven monsoon in some
parts of the country this year might be one of the reason for falling
sales in its motorcycle segment. Also, in urban area, there are more
preferences towards light weight scooter/scooty and premium segment of
bikes and competitors of HMC has some edge on it.Rural sales contribute
almost 50% of HMC's revenue.
In the urban scooter market to compete with its rival Honda, HMC has
brought in two new models, which are completely been developed in-house.
The company is hopeful to gain further overall domestic market share
from its present 52% on the back of its new models and likely increased
demand for the ongoing festival season. Its also recently launched
Splendor Pro & Plus(manual & self-start feature) at reasonable &
competitive price with convenience & comfort for a Splendor ride.
The company has also inaugurated its first overseas manufacturing
facility in Columbia and is very hopeful for its global expansion drive
in the coming days.
Looking ahead, analysts are quite hopeful of sustained margin expansion
for HMC due to lower input/commodity prices, better product mix and
internal cost reduction programme.But new launches and its foray in to
the premium segment may hold the keys.
Apart form festival demand, implementation of 7-th pay commissions may
also increase the demand for both 4 & 2 wheelers significantly and all
the major auto companies, including HMC may be a beneficiary of that
also. HMC has also strengthened its R&D ecosystem both ingeniously and
by partnering several partners overseas in the last one year after
separation from Honda. It may also diversify into defence sector in future.
*As par BG metrics & current market parameters:*
*Present median valuation of HMC may be: 2650 (FY:15)*
*Projected median valuations might be: 2900-3100-3400 (FY:16-18)*
SCRIP EPS(TTM) BV(Act) P/E(AVG) Low High Median
200-DEMA 10-DEMA
HEROMOTOCO 129.28 327.58 21 2640.14 2631.15 2635.65
2567.46 2550.01
HEROMOTOCO 155.15 384.9 21 2892.26 2882.41 2887.34
2567.46 2550.01
HEROMOTOCO 178.5 455.25 21 3102.28 3091.72 3097.00
2567.46 2550.01
HEROMOTOCO 215.5 535.15 21 3408.67 3397.07 3402.87
2567.46 2550.01
*Analytical Charts: *
<http://2.bp.blogspot.com/-MfZMZeq4OEk/VicCaJ3cxUI/AAAAAAAAEgU/KNxc-d3i13I/s1600/HMC-20-20-2015.png>
<http://4.bp.blogspot.com/-UMAQBXV6drs/VicCbhkaibI/AAAAAAAAEgc/t7vIe2VjUt0/s1600/HMC-FIBB-20-10-2015.png>
<http://3.bp.blogspot.com/-68v5YRFBk24/VicCdr4ao1I/AAAAAAAAEgk/sKSYl_7E1uY/s1600/HMC-WK-20-10-2015.png>
<http://4.bp.blogspot.com/-IErtTku39M8/VicCfV2lh-I/AAAAAAAAEgs/_C0lh4TU5NQ/s1600/HMC-PATTERN-20-10-2015.png>
<http://4.bp.blogspot.com/-RQ2azJz34Sk/VicChA5fV4I/AAAAAAAAEg0/Hkbs6nSoT6E/s1600/HMC-TL-20-10-2015.png>
<http://2.bp.blogspot.com/-JENeQ6LUSrk/VicCjhL3b6I/AAAAAAAAEg8/XT_Qn-Ozrgo/s1600/HMC-TL-RSI-20-10-2015.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
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