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
Some key takeaways:
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:
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