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Tuesday July 24, 5:03 PMIndia Hero Honda net profit down 20 pct, beats fcastMUMBAI, July 24 (Reuters) - India's top motorcycle maker, Hero Honda Motors Ltd. , said on Tuesday its June quarter profit fell a less-than-expected 20 percent, helping its shares trim some losses on hopes the worst may have passed.New Delhi-based Hero Honda, battling firmer interest rates, volatile raw material prices and fierce competition, said net profit fell to 1.90 billion rupees ($47 million) in its fiscal first quarter from 2.38 billion a year earlier. Net sales rose to 24.48 billion rupees from 23.64 billion rupees. That compared with a consensus forecast of net profit of 1.84 billion rupees on net sales of 24.22 billion in a Reuters poll. Hero Honda's operating margins, a key gauge of profitability, fell to 10.8 percent from 13.5 percent a year earlier. Hero Honda, in which India's Munjal family and Japan's Honda Motor Co. each hold 26 percent, has about half the Indian market for motorbikes, the world's largest after China. "It seems like the bulk of their woes is behind them," said Prabhat Awasthi, an analyst at Brics Securities. "Raw material prices will continue to pressure, and volumes may remain muted in this quarter, but we should see improvements from then on," said Awasthi, who has a "buy" rating on the stock. Honda also has a fully owned unit in India that makes scooters and motorbikes. India's motorbike makers who rolled out more than 6.5 million units in the year to March 2007. Hero Honda sold 802,853 units in the April-June quarter, a drop of 3.6 percent from a year ago. It expects to boost sales with new launches, but these will also raise its marketing costs. It has delayed start of production at a new plant in northern Uttarakhand state to the new fiscal year starting April 2008 because of softer demand. The plant will have an initial annual capacity of 500,000 units, which will eventually be tripled. Hero Honda shares, which had fallen as much as 2.7 percent before the results, were down 1.6 percent at 693.50 rupees at 0834 GMT in a firm Mumbai market . The shares gained 0.5 percent in the June quarter, compared to a 2.7 percent decline for the auto sector index and a 12 percent gain for the main share index . Shares in Hero Honda, valued at $3.4 billion, trade at 14.5 times forecast earnings, compared to 16 times for rival Bajaj Auto , which last week reported a worse-than-forecast 18 percent fall in its quarterly profit to 2.26 billion rupees. ($1=40.3 rupees) |
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