{"id":482,"date":"2010-05-05T19:00:33","date_gmt":"2010-05-05T13:30:33","guid":{"rendered":"https:\/\/www.moneyworks4me.com\/investmentshastra\/?page_id=482"},"modified":"2021-01-15T10:20:21","modified_gmt":"2021-01-15T04:50:21","slug":"company-shastra-1","status":"publish","type":"page","link":"https:\/\/www.moneyworks4me.com\/investmentshastra\/company-shastra-1\/","title":{"rendered":"Company Shastra"},"content":{"rendered":"

Hero Honda Motors Ltd. – The World’s No.1 Two-Wheeler Maker<\/h2>\n

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Hero Honda\u2019s 10 YEAR X-RAY*: Green (Very Good)<\/span><\/h3>\n

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(* 10 YEAR X-RAY shows the financial performance of a company in the last 10 years.)<\/address>\n

Hero Honda, in brief<\/h2>\n

Hero Honda Motors Ltd, a joint-venture between India\u2019s Hero Group and Honda Motor Company of Japan, is the world\u2019s largest two-wheeler manufacturing company. <\/strong>Motorcycles contribute around 95% of its total sales. The Company\u2019s motorcycles are known for efficiency, quality and longevity, and they set industry benchmarks for fuel mileage and low emission. Hero Honda has over 59% market share in the motorcycle segment in India with leadership position in the entry-level segment (75-125 CC). Splendor, a 100-CC Motorcycle by Hero Honda, is one of the largest selling motorcycles in the world. More than 90% of its revenues come from the domestic market. The Company has maintained the World\u2019s No.1 two-wheeler manufacturer position for the 9th consecutive year in 2009<\/p>\n

What does Hero Honda’s Past Say?<\/h2>\n

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Hero Honda has performed robustly in all its parameters over the last 10 years. Its impressive fundamental past forms a strong base for its future. Hence, the 10 YEAR X-RAY of Hero Honda is Green (Very Good)<\/strong><\/span><\/p>\n

What is Hero Honda’s Short Term Outlook?<\/h2>\n

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Higher Net Profit due to lower tax outgo: <\/strong>Hero Honda\u2019s Haridwar plant accounted for 30% of its total production in FY10 and is going to complete its one year very soon. It is currently enjoying 5 years income tax exemption and 10 years excise duty exemption. Due to this, the Company\u2019s effective tax rate fell to 18.8% in FY10 from 26.4% in FY09. Without this tax benefit, the Profit growth rate in the March quarter is around 30%.<\/p>\n

High raw material prices, increase in petrol prices, excise duty hike and high interest rates are causes for concern: <\/strong>Steel (70% of raw-material cost) price is at a higher level. Also, in the Budget 2010-11, the Government has increased excise duty from 8% to 10%. Both will increase\u00a0cost of production in the short term. The purchase of two-wheelers in India is heavily dependent on bank loans. Looking at the high CRR, we expect that banks will hike the interest rate in the near future. This, along with the increase in petrol prices may affect its demand adversely. At the same time, we expect the increasing purchasing power to drive demand in the short term<\/p>\n

While the immediate past has been great, the immediate future has a few challenges. Hence, we can expect the short term outlook of Hero Honda to be Orange (Somewhat Good)<\/strong><\/span><\/p>\n

What is Hero Honda’s Long Term Outlook?<\/h2>\n

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