Mehabe score: 1 G Factor: 7 Piotski Score: 6 The stock has a rating . The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 7 and Piotski score of 6.
Description
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.
Main Points
Established Brands and market share
It is the world’s largest manufacturer of 2 Wheelers, in terms of unit volumes sold by a single company in a calendar year, for 19 years in a row #
In FY 20, it sold 64 lakh two-wheeler units. Sales grew at a CAGR of 39% over the past decade.
The overall market share of the company in the two-wheeler segment stands at 35.7% as of FY20
The company has some strong brands under its names like Splendor, Passion, Glamour in the bike segment and like Pleasure, Maestro in the scooter segment and others, etcSite:HEROMOTOCOMain Symbol:HEROMOTOCO
Stock trades at 2898.0, below its 50dma 2948.54 and below its 200dma 2977.2. The stock remains bearish on technicals
The 52 week high is at 3629.05 and the 52week low is at 2603.70
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
-Stock is providing a good dividend yield of 3.11%.
– has a good return on equity (ROE) track record: 3 Years ROE 22.25%
– has been maintaining a healthy dividend payout of 57.26%
Weakness
– The company has delivered a poor sales growth of 1.70% over past five years.
Competition
– The industry trades at a mean P/E of 41.0x. Eicher Motors trades at the industry’s max P/E of 55.0x. HEROMOTOCO trades at a P/E of 20.7x
– Industry’s mean G-Factor is 5.3 while the mean Piotski score is 5.0. HEROMOTOCO has a G-Factor of 7 and Piotski scoreof 6.
– Average 1 month return for industry is -3.5%. The max 1- month return was given by Eicher Motors: a return of -1.34 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 8690.0 cr compared to Rs 6334.0 cr for period ended Mar 2020, a rise of 37.2%
Operating Profits reported at Rs 1227.0 cr for period ended Mar 2021 vis-vis 673.0 for period ended Mar 2020 .
Operating Margins expanded 349.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 44.1 compared to Rs 51.02 for previous quarter ended Dec 2020 and Rs 30.27 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 30959.0 cr for period ended Mar 2021 vis-vis sales of Rs 29254.0 cr for the period ended Mar 2020, a growth of 5.5%. The 3 year sales cagr stood at -1.6%.
Operating margins shrank to 13.0% for period ended Mar 2021 vis-vis 14.0% for period ended Mar 2020, contraction of 100.0 bps.
Net Profit reported at Rs 2918.0 cr for period ended Mar 2021 vis-vis sales of Rs 3638.0 cr for the period ended Mar 2020, falling 24.7%.
Company reported a poor Net Profit CAGR of -7.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 8% on a 1 Year basis vis-vis a return of -6% over the last 3 Years. – The compounded sales growth on a TTM bassis is 6% vis-vis a compounded sales growth of -2% over the last 3 Years. – The compounded profit growth on a TTM basis is -8% vis-vis a compounded profit growth of -8% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 37.19% vis-vis 35.89% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 9.37% vis-vis 9.37% for Dec 2020
Conclusion
– is almost debt free.
-Stock is providing a good dividend yield of 3.11%.
– has a good return on equity (ROE) track record: 3 Years ROE 22.25%
– has been maintaining a healthy dividend payout of 57.26% – The company has delivered a poor sales growth of 1.70% over past five years.
