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April 28, 2001
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Money > Business Headlines > Report April 28, 2001 |
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Hero Honda's Rs 560-mn profit below expectationsNetScribes /Mahesh Shetty Analysts and sector watchers say Delhi-based bike major Hero Honda's net profit for the fourth quarter ended March 31, 2001 is just a little under what they were looking for. The company yesterday announced it had posted net profits of Rs 561.20 million on total sales of Rs 8.60 billion. This is almost a 10 per cent drop over the same quarter last year when the company posted net profits of Rs 622.50 million. Total sales in the same period were Rs 5.94 billion, representing a healthy 45 per cent rise over last year. Increasing pressure on profit margins has made its impact on the market leader's consistent bottomline growth. "Despite the impressive topline growth, the bottomline got depressed on two counts. One, the company's margins have taken a beating and two, there is a large provision for investments that have pulled down the profit," said Geeta Chugh, analyst at SSKI Securities, Bombay. This provision was made last year for the company's mutual fund investments whose value has eroded over time. The company had maintained that this erosion in value was a short-term phenomenon and that there was not much to worry about. "Not so" say analysts who believe this was not a very pragmatic decision as these investments have now lost much of their earlier perceived value. "This time's bottomline numbers are a little below what we were looking for but the company has still managed to buck the depression with impressive topline growth," said an analyst at a foreign bank in Bombay. For this full year, Hero Honda posted a net profit of Rs 2.46 billion on total sales of Rs 31.93 billion against last year's net profits of Rs 1.92 billion and sales of Rs 22.68 billion. On the Bombay Stock Exchange on Friday, the stock closed for the week at Rs 152.05, down from its previous close of Rs 157.10 with a total of 187,463 shares traded. |
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