Hero Moto on 'green' road

Hero Motocorp is the top gainer on the BSE currently, the stock being up almost 4% at Rs.1656.60. Its intra day high is at Rs.1684. Market cap is at Rs.33,080 crore.

The stock is after the company posted a better-than-expected set of numbers for Q4FY13. Though everyone had largely expected a decline for the third consecutive quarter, the decline was not as steep as estimated – net profit at Rs.574 crore, down 5% (YoY). Increasing competition, lower volumes and poor demand offtake, all together pulled down the profits. There was a 2.8% fall in volumes and this was amply reflected in the net sales, which (YoY) was up by a meager 2% at Rs.6145 crore. The company sold 15.27 lakh two-wheelers in Q4 v/s 15.72 lakh units in previous Q4.EBITDA fell by 150 bps at 13.8%.

For FY13, the company posted a 11% fall in net profit at Rs.2118 crore while its EBIDTA slipped 160 bps to 13.9%. Its overall market shares fell 240 bps to 42.85% and most of this was eaten away by its earlier partner, Honda. The company continues to maintain a cautious outlook for the future and has stated that times remain tough for the sector. Once the interest rate cycle starts coming down,maybe we will a spike up in demand.

The market is more enthused due to two factors –a  very generous dividend of 3000% or Rs.60 per share on Rs.2 face value share for FY13 and secondly, to improve margins, it has already announced a price hike of Rs.500 to Rs.1500 across all models and with immediate effect.