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Hero Motocorp Ltd: Stellar Performance, Robust volume pick up! - Views on News from Equitymaster
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  • Oct 28, 2016 - Hero Motocorp Ltd: Stellar Performance, Robust volume pick up!

Hero Motocorp Ltd: Stellar Performance, Robust volume pick up!
Oct 28, 2016

Hero Motocorp ltd has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, company reported highest ever volumes. Revenues grew by 15% YoY and net profits grew by 26.7%.

Performance summary
  • For 2QFY17, net sales grew by 15% YoY on the back of strong volume growth. Volumes for the quarter grew at 15.8% YoY, while realizations were down by 0.7%.
  • Motorcycles grew by 13% YoY, while scooters outgrew the industry and grew at 47%.
  • The volume growth has been on the back of strong demand for the executive segment, scooters, and new product launches. Within the existing product portfolio 'Glamour' continues to be a leader in 125 cc segment.
  • The company launched 'Splendor iSmart 110' in the executive segment and 'Achiever 150' in the premium segment. Both the products have been accepted well in the market.
  • Operating profits for the quarters increased by 24.9% YoY with margins expanding by 128 bps to 16.2%.This was on the back of lower raw material prices which stood at 61.3% of the sales against 67.6% in the same quarter last year.
  • Net profits grew more than operating profits at 26.7% YoY with margins expanding by 108 bps to 11.8%.
  • During the first half of the financial year 2016-17 (1HFY17), top-line grew by 11.3% YoY and net profits grew by 22.5%.

    Standalone financials: A snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    No. of two wheelers sold 1,574,861 1,823,498 15.8% 3,220,728 3,568,887 10.8%
    Net sales 73,465 84,487 15.0% 147,819 164,594 11.3%
    Expenditure 62,509 70,799 13.3% 126,444 138,605 9.6%
    Operating profit (EBDITA) 10,956 13,689 24.9% 21,376 25,990 21.6%
    EBDITA margin (%) 14.9% 16.2% 128.90 14.5% 15.8%
    Other income 1,115 1,524 36.6% 2,159 2,727 26.3%
    Depreciation 1,091 1,193 9.4% 2,120 2,345 10.6%
    Interest 12 16 26.0% 24 31 25.0%
    Profit before tax 10,968 14,004 27.7% 21,390 26,342 23.1%
    Exceptional item -9 -95 -19 -105
    Tax 3,107 3,962 27.5% 6,054 7,468 23.4%
    Profit after tax / (loss) 7,852 9,947 26.7% 15,318 18,768 22.5%
    Net profit margin (%) 10.7% 11.8% 108.56 10.4% 11.4%
    No. of shares (m) 199.7
    Diluted earnings per share (Rs)* 175.1
    Price to earnings ratio (x)* 18.92

    * based on 12 month trailing earnings

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