Hero Moto Corp earlier also known as “Hero Honda” is one of India’s first motorcycle manufacturers.
The company started in 1984 as a Technological collaboration with Honda, Japan. Before this collaboration, Hero was selling Cycles under the brand name, Hero Cycles.
In 2011, Honda group sold its 26% stake in the company to the Munjals (promoters) and ended the JV. Post the termination of JV, the name of the company was changed to Hero Motocorp.
Analysis
The Indian Auto Industry comes in the top 5 largest auto industries of the world. India is also a prominent auto exporter and has strong export growth expectations for the near future. The support from the government is providing the auto companies with a boost needed in their development. But will it sustain?
We can look into more details and dig a little deeper into the analysis of the stock of this sector. Hero MotoCorp stock price today is Rs 5,311.40. Let’s look at how Hero MotoCorp is performing and if it is the right time to buy the stock of Hero MotoCorp with detailed analysis.
- The mainstream of revenue for Auto Sector is their sales, Hero MotoCorp has reported decent sales growth of 10.80 % and in the latest quarter sales was Rs 10,143.73 Cr. To judge whether the company’s inventory is being sold or not and the sales picture is true, inventory turnover ratio plays a major role, which is 26.46 times for Hero MotoCorp . It is managing its inventory efficiently .
- Hero MotoCorp reported Profit growth of 36.33 % over the year, where the latest year profit is Rs 3,967.96 Cr compared to the previous year of Rs 2,910.58 Cr. The new permits by governments and increasing demand will lead to an increase in profits in the coming year.
- The operating profit of Hero MotoCorp in the latest quarter is Rs 1,459.75 Cr. It helps in measuring the company’s operating performance which is used to make financing decisions.
- Hero MotoCorp has a healthy ROE of 22.93 %. The ROE is an important financial parameter because Auto companies work with high equity investments. Also, they have to take huge debt to incur the research and manufacturing work so their Debt to Equity ratio should be evaluated. Hero MotoCorp has a low Debt to Equity ratio of 0.
- Hero MotoCorp pays a dividend of 140 Rs per share. It tells us that a company likes to share profits with its shareholders. The dividend yield is low at 2.64 %.
- The share of promoter in Hero MotoCorp is low at 34.76 %, where the pledging is 0 %.
- What the market is willing to pay for the company for its earnings can be determined by PE multiple. Current PE of Hero MotoCorp is 24.90 compared to the 5 year average PE of 17.37.
Yesterday, the stock closed at 5961, above its previous high of 5895 (hit on 18th June 24), and hence was looking promising for further momentum. The logic behind the ITM Call Option of 6000 is to reduce premium erosion because of reduced time value. The positional target could be Rs.6650.
