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Hero Honda: Topline zooms 44% - Views on News from Equitymaster
 
 
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  • Jan 7, 2002

    Hero Honda: Topline zooms 44%

    Hero Honda has reported yet another stellar quarterly performance. While sales grew by 44% in 3QFY02, despite stiff competition, margins have increased sharply resulting in a 90% growth in profits.

    (Rs m) 3QFY01 3QFY02 Change
    Sales 8,492 12,195 43.6%
    Other Income 17 257 1439.5%
    Expenditure 7,321 10,294 40.6%
    Operating Profit (EBDIT) 1,171 1,901 62.3%
    Operating Profit Margin (%) 13.8% 15.6%  
    Interest 8 4 -50.0%
    Depreciation 112 128 14.0%
    Profit before Tax 1,068 2,027 89.8%
    Tax 366 694 89.7%
    Profit after Tax/(Loss) 702 1,332 89.9%
    Net profit margin (%) 8.3% 10.9%  
    No. of Shares (m) 199.7 199.7  
    Diluted Earnings per share* 14.1 26.7  
    P/E Ratio   11.0  

    During the nine months ended December 31, 2001, the company has purchased and sold long term investments amounting Rs 83 m and Rs 252 m respectively. As a result, other income in 3QFY02 has increased sharply. Operating margin has increased by 180 basis points to 15.6% in 3QFY02. Higher realisation led by higher sales of 'Passion', which is priced at a premium to its flagship brand 'Splendor', could have led to this rise in margins. Apart from this, Hero Honda had initiated a value engineering exercise, which was also expected to improve profitability.

    The stock currently trades at Rs 294 implying a P/E multiple of 11.0x annualised 3QFY02 earnings.

     

     

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