HERO MOTOCORP: BUY TARGET PRICE: RS.3268 :: Kotak Sec, PDF link

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HERO MOTOCORP (HMC)
PRICE: RS.2874 RECOMMENDATION: BUY
TARGET PRICE: RS.3268 FY16E P/E: 15.8X
HMC's 2QFY15 revenues at Rs69.2bn was up by 20% YoY and were in line
with our estimates. EBITDA margin in 2QFY15 came in at 13.5%, similar QoQ
and down 100bps YoY. EBITDA margin came in 40bps lower than our
expectation. Net profit during the quarter was boosted by completion of
royalty amortization and higher other income. Accordingly net profits
witnessed a sharp jump of 59% YoY and 36% QoQ. Higher other income led
to net profit coming ahead of estimates. Going ahead, we estimate ~12%
CAGR volume growth over FY14-FY16E. EBITDA margin is expected to
receive support from cost control program undertaken by the company. Net
profit growth for the company is expected to grow by 31% CAGR over FY14-
16E, aided by volume increase, EBITDA margin expansion and completion of
royalty amortization. We revise our earnings upward for FY16. We upgrade
the stock to BUY (ACCUMULATE earlier) with revised price target of Rs3,268
(earlier Rs2,855).


LINK
http://www.kotaksecurities.com/pdf/pdfs/FUNDHEROMOTOCO20102014100417.pdf