Top Indian Companies: Hero MotoCorp Limited

Hero MotoCorp Limited, formerly Hero Honda, is an Indian multinational motorcycle and scooter manufacturer headquartered in New Delhi. HeroMotocrop is a Nifty50 company with a weightage of 0.43%.

The company is the largest two-wheeler manufacturer in the world, and also in India, where it has a market share of about 37.1% in the two-wheeler industry. As of 27 May 2021, the market capitalization of the company was ₹59,600 crore (US$7.8 billion)

Hero Honda started its operations in 1984 as a joint venture between Hero Cycles of India and Honda of Japan

"Hero" is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India.

The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (1984–2010) has come from the Japanese counterpart Honda

The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29 July 2011. The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins.

On 21 April 2014, Hero MotoCorp announced its plan on a ₹254 crore (equivalent to ₹345 crore or US$45 million in 2020) joint venture with Bangladesh's Nitol-Niloy Group in the next five years to set up a manufacturing plant in Bangladesh. The plant started production in 2017 under the name "HMCL Niloy Bangladesh Limited". Hero MotoCorp owns 55% of the manufacturing company and the rest 45% is owned by Niloy Motors (A subsidiary of Nitol-Niloy Group).

Operations

Hero MotoCorp has five manufacturing facilities based at Dharuhera, Gurugram, Neemrana, Haridwar, and Halol . These plants together have a production capacity of over 76 lakh (7.6 million) 2-wheelers per year.

Hero MotoCorp has a sales and service network with over 6,000 dealerships and service points across India. It has had a customer loyalty program since 2000, called the Hero Honda Passport Program which is now known as Hero GoodLife Program.

As of 31 March 2020, the company has an annual capacity of 9.1 million units in its 8-world class manufacturing facilities. Apart from these manufacturing facilities the company also has 2 state of the art R&D facilities, in Germany & Jaipur respectively.

Shareholding Pattern

The Shareholding Pattern page of Hero MotoCorp Ltd. presents the Promoter's holding, FII's holding, DII's Holding, and Share holding by general public etc.

Holder's Name No of Shares % Share Holding

No of Shares 199805231 100%

Promoters 69442081 34.75%

Foreign Institutions 59080388 29.57%

Banks/ Mutual Funds 16838890 8.43%

Others 4786736 2.4%

General Public 19165772 9.59%

Financial Institutions 30491364 15.26%

FY2023 Q4 and Full Year Results

Hero MotoCorp on Thursday said its consolidated profit after tax increased by 31 per cent to Rs.811 crore for the fourth quarter ended March 31, 2023, riding on the back of robust sales.

The country's largest two-wheeler maker reported a profit after tax (PAT) of Rs.621 crore in the January-March quarter of 2021-22 fiscal.

Total income rose to Rs.8,672 crore in the period under review from Rs 7,628 crore in the year-ago period, Hero MotoCorp said in a regulatory filing.

The company reported sales of 12.70 lakh units in the fourth quarter, up 7 per cent, as compared with 11.89 lakh units in the same period of 2021-22 fiscal.

For the year ended March 31, 2023, the company reported a consolidated PAT of Rs 2,800 crore as against Rs 2,329 crore in the fourth quarter of 2021-22 fiscal.

Total income increased to Rs 34,727 crore in the period from Rs 30,106 crore in the year-ago period.

On a standalone basis, the net profit for the quarter stood at Rs 859 crore, reflecting a growth of 37 per cent over Rs 627 crore reported in the previous year.

The company reported sales of 53.29 lakh units in FY23 compared with 49.44 lakh units in FY22.

Hero MotoCorp said its board declared a final dividend of Rs 35 per share taking the total dividend for the year to Rs 100 (5000 per cent) on face value of Rs 2 per share.

Commenting on the company's performance, Hero MotoCorp CEO Niranjan Gupta said the company has been able to drive margin expansion and profitable growth this quarter through a judicious combination of pricing, savings, and product mix.

"In the coming fiscal year, we have lined up a slew of product launches in different segments with an aim to strengthen our premium portfolio as well as premiumisation of existing models, which will help us deliver improvement in market share," he added.

The company is also accelerating its EV rollout, with a plan to be in 100 cities within this calendar year, Gupta said.

"Apart from exclusive Vida outlets in certain cities, we will be using our existing distribution system across cities to ensure wider reach. The recent price revision now makes Vida accessible to more customers, and we expect this will increase the EV transition in scooter category," he added.

Gupta noted that the economic activity in India continues to build momentum with key indicators moving in the positive direction.

"We do expect two-wheeler industry revenue growth to be double-digit in the coming year," he stated.

Shares of the company ended 0.43 per cent up at Rs 2,514.05 apiece on the BSE

Brokerage, Prabhudas Lilladher believe HMCL will benefit in medium to long-term with

(1) focus on increasing export penetration

(2) recovery in 2W sales with improvement in rural sentiments

(3) incremental savings to be achieved through cost savings program leading to margin expansion and

(4) success in EVs via investment in Ather, in-house mass product E-Scooter and JV with Gogoro.

Brokerage have tweaked their estimates by 0.7%/7.5% for FY23/24 and maintain ‘BUY’ with a target price of Rs 3,221 at 15x Dec-23E EPS vs Rs 3,194.

ESG

Fuel Economy & Use-phase Emissions

The combustion of petroleum-based fuels by motor vehicles accounts for a significant share of greenhouse gas (GHG) emissions that contribute to global climate change. It also generates local air pollutants such as nitrogen oxides (NOx), volatile organic compounds (VOCs), and particulate matter (PM), which can threaten human health and the environment.

While use phase emissions are downstream from auto manufacturers, regulations often focus on auto manufacturers to help reduce these emissions, such as through fuel economy standards.

More stringent emissions standards and changing consumer demands are driving the expansion of markets for electric vehicles and hybrids, as well as for conventional vehicles with high fuel efficiency.

Moreover, manufacturers are innovating by designing vehicles made with lighter-weight materials to improve fuel efficiency.

Materials Sourcing

Materials Efficiency & Recycling

Auto manufacturing involves the use of significant amounts of materials (including steel, iron, aluminum, and plastics) and can generate substantial amounts of waste (including scrap metal, paint sludge, and shipping materials).