Emkay Research has recommended reduce rating on Hero Honda Motors, October 19, 2007 report.
"Hero Honda has reported net profits of Rs 2043 million, which is ahead of Emkay Research estimation of Rs 1957 million for 2QFY08. The net profits affected by lower other income and higher tax provisions. The other income declined by 34% YoY to Rs 393 million. Also there has been higher provision for tax during the quarter at 32.4% in 2QFY08 as compared to 31.5% in 2QFY07 and 30.7% in 1QFY08.
As a result the net profits declined by 5.4% YoY to Rs 2043 million. 1HFY08, was a subdued for the two wheeler industry as well as Hero Honda. While rising interest rates have impacted the demand, in our view, the key reason for a significant decline in demand for 100 CC bikes was lack of intent on part of the bankers to provide credit to the two wheeler segment. At Rs 726, the stock trades at price to earnings multiple of 16.5 times and 14 times our FY08 and FY09 estimated earnings. We maintain our REDUCE recommendation on the stock." says Emkay Research report.
"Hero Honda has reported net profits of Rs 2043 million, which is ahead of Emkay Research estimation of Rs 1957 million for 2QFY08. The net profits affected by lower other income and higher tax provisions. The other income declined by 34% YoY to Rs 393 million. Also there has been higher provision for tax during the quarter at 32.4% in 2QFY08 as compared to 31.5% in 2QFY07 and 30.7% in 1QFY08.
As a result the net profits declined by 5.4% YoY to Rs 2043 million. 1HFY08, was a subdued for the two wheeler industry as well as Hero Honda. While rising interest rates have impacted the demand, in our view, the key reason for a significant decline in demand for 100 CC bikes was lack of intent on part of the bankers to provide credit to the two wheeler segment. At Rs 726, the stock trades at price to earnings multiple of 16.5 times and 14 times our FY08 and FY09 estimated earnings. We maintain our REDUCE recommendation on the stock." says Emkay Research report.
Religare research has revised their rating on Orbit Corporation from buy to accumulate to reflect the recent run up in the share price. "At the CMP of Rs 652, the stock trades at 9.6x FY08E earnings and in line with our DCF estimates. However this estimate is based on 1.4mn sq ft of incremental projects, which is lower than the guidance of 2.1mn sq ft that the company gave in its post result conference call. Incorporating the additional 0.6mn sq ft in our DCF model we arrive at a target price of Rs 680, which is close to the current market price.
We are revising our rating from Buy to Accumulate to reflect the recent run up in the share price, which now largely captures the value of the projects on hand (existing 1.1mn +planned 2.1mn). We remain positive on the company’s prospects. Further price movement will be driven by new announcements, as the company bags new projects." says Religare research report.
