Hero Moto Corp

Industry Profile  : Indian automobile industry is one of the largest and one of the most competitive in the world. In FY 15-16 production total was 23.96 million vehicle. The sector account for 7.1 per cent of GDP of India out of which 81% is Two wheeler market. Indian automotive aftermarket is estimated to grow at around 10-15 per cent to reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. It has the potential to generate up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 per cent to India’s Gross Domestic Product. Maruti in Car and Hero Moto corp is in Two wheeler market are leader. Passenger Vehicle holding 13% market. Maruti Suzuki expects Indian passenger car market to reach four million units by 2020, up from 1.97 million units in 2014-15. Mr Young Key Koo, Managing Director, Hyundai Motor India Ltd, has stated that India is a key market for the company, not only in terms of volumes but also as a hub of small products for exports to 92 countries. As many companies trying to increase revenue, rural Market is large for further growth. India is also being one of the leading exporter of automobiles and has strong export growth expectations for near future. In April-March 2016, overall automobile exports grew by 1.91 per cent. PV, Commercial Vehicles (CV), and Two Wheelers (2W) registered a growth of 5.24 per cent, 16.97 per cent, and 0.97 per cent respectively in April-March 2016 over April-March 2015. The industry has attracted Foreign Direct Investment (FDI) worth US$ 15.79 billion during the period April 2000 to September 2016, according to data released by Department of Industrial Policy and Promotion (DIPP). Several automobile manufacturers, from global majors such as Audi to Indian companies such as Maruti Suzuki and Mahindra & Mahindra, are exploring the possibilities of introducing driverless self-driven cars for India.

Company Profile  :  Hero MotoCorp is the World’s single largest two–wheeler motorcycle company. Honda Motor Company of Japan and the Hero Group entered a joint venture to setup Hero Honda Motors Limited in 1984.

The product product portfolio of company includes like Karizma ZMR, Karizma, Xtreme Sports, Xtreme, Hunk, Impulse, Achiever, Ignitor, Glamour Programmed FI, Glamour, Super Splendor, Passion XPRO, iSmart 110, Passion PRO, Passion PRO TR, Splendor iSmart, Splendor PRO Classic, Splendor PRO, Splendor+, HF Deluxe ECO, HF Deluxe, HF Dawn, Duet, Maestro Edge, Maestro and Pleasure.  Its manufacturing plants are located in Dharuhera, Haryana; Gurgaon, Haryana; Haridwar, Uttarakhand; Neemrana, Rajasthan, and Villa Rica, Colombia. Its research and development center is located in Jaipur, Rajasthan. It has a Global Parts Centre for manufacturing and supplying the parts at local and global markets at Neemrana, Rajasthan.

Shareholding Pattern :  16 promoter entities hold 34.64%. 247 mutual funds hold it their portfolio which makes 6.64%. 55 financial Institutions hold 0.76%. 20 insurance companies hold 4.21%. Foreign investors are looking like real owner with 42.12% holding. Remaining is held by public.

Financials and Ratios  : 

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 - 162016 - 17
Revenue19,687.5523,943.6024,166.4925,721.8528,078.0428,990.4228,997.42
Net Profit1,927.902,378.132,118.162,109.082,385.643,132.373,377.12
NPM9.79%9.93%8.76%8.19%8.49%10.80%11.64%
EPS96.54119.09106.07105.61119.46156.86169.12
Book Value148.03214.81250.69280.41327.56397.83506.32
Dividend Per share105456065607285
Dividend payout108.7537.7856.5661.5950.2245.8951.44
ROE65.2155.4342.3137.6636.4739.4233.39
ROCE40.9342.8638.7137.1635.9337.7731.85
ROA17.9724.0421.9620.8822.6725.3822.98
Asset Turnover180.84238.43246.51250.31262.17231.74193.78

Future Prospects  :  Being leader of Two wheeler market in India, even among global peers. Its wrong to say that they will perform good. They are performing. That’s why they are leader in Indian market. Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. Definitely GST and Demonetization was large hit for company but now the company is coming out of it. 2018 is expected to be good year for company.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter