India Earnings season: Hero Moto corp expected to grow 16% and profits 28%

In the next few hours Bajaj Auto’s 20% growth will be compared to Hero Motocorp having already beaten its own profit expected with a 22% growth expanding margins to 21.3%

Hero had the largest volume gains in the latest quarter bringing market share back to 40% even as erstwhile partner Honda caught up to a formidable #3 with a 200k per month sales

Bajaj Sales still compare at 68% of Hero’s INR 61 bln for the quarter after Hero grew 16.86% y-0-y, Hero’s profits grew 43% Quarterly volumes were the highest at 1.6 mln units in three months with Bajaj trailing at 1 mln

Its Operating profit margins on adjusted basis counted as low as 12.7% while unadjusted basis still compares at 15.7% against 17.6% for Bajaj Auto strictly on business expenses at both companies

Hero’s sales are higher by 14% over September 2011 but its not known if its shares in the higher margin >125 cc has increased from the low 6% last quarter Bajaj sells 18% in the higher CC categories for its profit margins and has also included growing CV (Auto sales) in these data

The retail consumption level off: Hero Honda perks up

Hero Honda rider
Image by Danny McL via Flickr

After sifting thru monthly Auto sales nos. ith great aplomb in 2010 and much muted in 2011, we did warn you that the Indian retail consumption story and the car sales are no longer tracking and are way behind the $5 Tln chinese economy where $2.5 Tln is the Consumer component. India’s $700 mln consumer consumption yet relies a great deal on two wheeler sales though and while Honda now sells 100k a month on its own, its partnership with Hero Honda was always the leader in the motorcycle segment since its advent in 1991.

Its quarter’s sales are up to $1.4 bln ( Rs 56.38 bln) up 33% yoy Profit Margins remained in the double digits (<10%, but almost there) with a Net of $139.5 mln. Its Apr-Jun sales were 1.31 mln motorcycles as reported earlier this week(BS Motoring) with June coming at 512k much a consistent 20% jumpp ¬†year on year despite Honda moving on into an independent motorcycle producer, which terminates their active role in the JV later this year

Hero honda did give an ant i indication before the uptick when the markets opened and we will look for whats amiss here too as we adopt the Indian Auto and Motorcycle consumption story as a leitmotif of our India research here

The retail consumption level off – Hero reports lower Q4

Hero Honda Passion
Image via Wikipedia

Profits year on year are down 16% and the auto number s for March have definitely scared observers as well. The profit deceleration is hihger than expected ( misses Bloomberg poll estimates by 2% ) Sales growth numbers are respectable yoy like for others as Bajaj Auto and Maurti, Hyundai ( even yoy pretty bad)

India just does not have the profile to switch to SME players in this age and till the dollar gets to levels of below Rs 40 to a Dollar, the Trillion Ruipee EV companies are likely to be good enough for PE or individual global portfoliso. Index ETFs are anyway 75% of the FDI with $1 bln per month likely to continue. disposable incomes allowed food and fuel inflation without concerns yet, but going forward the larger imported inflation and the transmission to manufacturing and the retail demand curves ( durables, autos, services) have been the immediate market concerns that need facts to displace the pessimism

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