Hero MotoCorp: Cruise control

Hero MotoCorp: Cruise control

Shares of Hero MotoCorp are off highs but continue to witness bouts of buying at current level as investors remain optimistic about its growth prospect. While the company’s fiscal third quarter earnings bettered the street expectations, the tie-up with Harley Davidson has fuelled momentum.
Hero MotoCorp and Harley Davidson have started the joint product development work on motorcycles that would see Hero enter the bigger engine segment riding on the brand imagery of Harley-Davidson.
Earlier this week both companies announced the setting up of a new business unit that would be tasked to sell Harley-Davidson bikes in India through a network of 11 dealers. The Milwaukee-based Harley ended its sales and manufacturing operations in September in India after mounting losses and falling demand.

For Hero MotoCorp, the premium segment (150cc and above) will be the area of focus in the coming years after having reached peak market share in the budget motorcycle segment (100cc-110cc).
Meanwhile, the country’s biggest two-wheeler maker, last week reported a 23.17% jump in its December quarter net profit at Rs 1,084.47 crore on the back of strong revenue growth. The company reported a profit of Rs 880.41 crore in the same quarter last fiscal.

Revenue increased by 39.7% at Rs 9,775.77 crore against Rs 6.996.73 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 36.1% at Rs 1,413.6 crore against Rs 1,038.9 crore, while margin was at 14.5% versus 14.8%.
The board of directors declared an interim dividend at 3,250 percent ie Rs 65 per equity share (face value of Rs 2 per equity share) for the financial year 2020-21.

Further, the board declared a special interim dividend of Rs 100 crores at 250 percent ie Rs 5 per equity share, to mark the milestone of achieving 100 million cumulative production of two-wheelers, taking the aggregate interim dividend declared to 3,500 percent ie Rs 70 per equity share.
It has fixed February 16, 2021 as the record date for determining the entitlement of members for the purpose of payment of interim dividend. The payment of interim dividend/ dispatch of dividend warrants will be completed by March 6, 2021.

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