Reduce Hero MotoCorp - 1QFY2013 Result Update - Kotak

HMC's 1QFY13 results came in slightly lower than our expectations. Lower than expected blended realization and other operating income and marginally higher operating cost led to EBITDA margins coming in at 15% as against expected 15.8%.

- Net profit during the quarter grew by 10.3% YoY in line with revenue growth of 10%.

- Management expects growth industry volumes to grow under 10% and HMC to outperform the industry growth rate. Company expects to gain market share in the scooter segment.

- Competition for HMC is expected to heat up with competitors launching new products in the 100-125cc segment. Further margins for HMC are also expected to remain under pressure in FY13.

- We retain our REDUCE rating on the stock with an unchanged price target of Rs1,900.

Source : Equity Bulls

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