Hero Honda Q2 FY 2011-2012 Result Analysis

Hero Motor Corp. the country's largest two-wheeler maker has reported a 19.4% YoY jump in net profit of Rs 604 crore in the quarter ended September 2011 compared to Rs 506 crore in the corresponding quarter of last fiscal. Net sales jumped 28% to Rs 5,784 crore from Rs 4,511 crore YoY.

The company sold 1.54 million 2-wheelers in the July-September quarter as against 1.29 million in same quarter the previous year. In the first half of financial year 2011-12, the company sold more than 3 million 2-wheelers.

EBITDA margin in the second quarter stood at 15.76%. The EPS for the current quarter stood at 30.24 while for the first half it stands at 58.18.


For the full year the company is expected to post an EPS of approximately Rs. 120. At the current market price of Rs. 1985 the stock is trading at a PE multiple of 16.5 times which is reasonable given the leadership position of the company in two wheeler space and superior performance quarter after quarter. Hence the investors with one year horizon can accumulate the stock on declines for an approximate return of 20% on capital.  

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