Discover the remarkable journey of Hero MotoCorp Ltd, India’s leading two-wheeler manufacturer. Explore its market dominance, global footprint, and financial performance. Learn why investing in Hero MotoCorp Ltd could be a promising opportunity for investors.
In the bustling metropolis of New Delhi, India, Hero MotoCorp Ltd. stands tall as a powerhouse in the realm of two-wheeler. Since its establishment in 1984, this iconic company has held the prestigious title of the world’s largest manufacturer of motorcycles and scooters, a status it has proudly maintained since the turn of the millennium in 2001.
Table of Contents
About Hero MotoCorp Ltd
Hero MotoCorp’s dominance is unparalleled, especially within the dynamic landscape of the Indian two-wheeler market. With an impressive 47% share in the domestic motorcycle market and a substantial 33.2% in the broader two-wheeler market, the company firmly cements its position as a market leader on its home turf.
With a sprawling network of over 10,000 customer touchpoints worldwide, Hero MotoCorp ensures not only widespread but also efficient access to its diverse clientele. This extensive infrastructure underscores the company’s commitment to accessibility and customer satisfaction.
Behind Hero MotoCorp’s success lies a formidable manufacturing prowess. Boasting an annual production capacity exceeding an impressive 9.50 million units across its eight cutting-edge manufacturing facilities, the company adeptly meets and surpasses market demands with remarkable efficiency.
Hero MotoCorp’s influence transcends geographical boundaries, as it extends its footprint to an astounding 47 countries internationally. Catering to a diverse global clientele, the company has firmly established itself as a trusted name in the world of two-wheeler on a global scale.
Hero MotoCorp’s unwavering dedication to innovation and customer satisfaction is evident through its staggering 110 million-strong customer base. Driven by a vision to shape ‘The Future of Mobility,’ the company’s mission emphasizes pioneering mobility solutions, fostering sustainable practices, and inspiring stakeholders through purposeful action.
Listed on the National Stock Exchange of India (NSE), Hero MotoCorp Ltd. is a prominent component of the Nifty 50 stock index. This listing underscores the company’s strong presence in the Indian financial market and reflects its significance as a leading player in the automotive sector.
Subsidiaries of Hero MotoCorp Ltd
Hero Cycles Ltd
As a flagship entity of the Hero Eco Group, Hero Cycles stands tall as one of the world’s largest bicycle manufacturers. Established in 1956, Hero Cycles not only produces top-quality bicycles but also champions eco-friendly transportation. With an impressive annual manufacturing capacity of around 5.2 million bicycles, the company showcases operational brilliance and offers a diverse range of models suitable for all age groups.
Hero FinCorp Ltd
Hero FinCorp plays a pivotal role in meeting the financial needs of customers, dealers, and suppliers of Hero MotoCorp. With a diverse product portfolio including solutions for two-wheeler financing, Hero FinCorp drives sales while ensuring a smooth financial experience. Its robust network provides financial products tailored to a wide variety of needs across different demographics.
Hero Future Energies Pvt. Ltd
Established in 2012, Hero Future Energies reflects Hero MotoCorp’s commitment to sustainability. Through wind, solar, and alternative energy projects, Hero Future Energies is shaping India’s renewable energy landscape, ensuring a cleaner and more sustainable future.
Share Holding Pattern of Hero MotoCorp Ltd
These figures represent significant actions taken by a company that directly influence shareholder value. They signify material changes within the company and have an impact on its stakeholders:
- Promoter Shareholding: 34.76%
- FII (Foreign Institutional Investor) Shareholding: 28.93%
- DII (Domestic Institutional Investor) Shareholding: 13.74%
- MF (Mutual Fund) Shareholding: 14.03%
- Public Shareholding: 8.55%
Hero MotoCorp Ltd. is a key player in the global two-wheeler industry, and conducting a comprehensive fundamental analysis of its financial ratios offers valuable insights into the company’s performance and financial health over the years. Let’s delve into each ratio to understand its implications in detail.
Fundamental Analysis of Hero MotoCorp Ltd | ||||
Ratio | March 2023 | March 2022 | March 2021 | March 2020 |
Profitability Ratio | ||||
Gross Profit Margin | 29.90% | 29.21% | 27.83% | 31.73% |
Net Profit Margin | 8.60 | 8.45 | 9.62 | 12.59 |
Return on Equity (ROE) | 16.87% | 14.62% | 18.93% | 25.25% |
Liquidity Ratio | ||||
Current Ratio | 1.61 | 1.99 | 1.79 | 2.08 |
Quick Ratio (Acid-Test Ratio) | 1.35 | 1.77 | 1.55 | 1.81 |
Solvency Ratio | ||||
Debt to Equity Ratio | 0.0209 | 0.0223 | 0.0241 | 0.0146 |
Interest Coverage Ratio | 37.93 | 62.34 | 84.94 | 99.12 |
Efficient Ratio | ||||
Inventory Turnover Ratio | 14.83 | 12.83 | 14.22 | 15.78 |
Account Receivable Turnover Ratio | 12.56 | 12.12 | 12.40 | 13.83 |
Valuation Ratio | ||||
Price to earning Ratio (P/E) | 16.69 | 19.78 | 19.95 | 8.76 |
Price to Book Ratio (P/B) | 2.82 | 2.87 | 3.74 | 2.19 |
Growth Ratio | ||||
Earning per Share (EPS) Growth | 145.66 | 123.78 | 148.39 | 181.91 |
Revenue Growth (in Rs. Cr.) | 34,370.81 | 29,802.38 | 31,380.47 | 29,614.43 |
Profitability Ratio
Gross Profit Margin:
This ratio indicates the percentage of revenue retained after deducting the cost of goods sold. Hero MotoCorp’s gross profit margin has fluctuated moderately over the years, with a slight decline in 2021 compared to 2020. This suggests that the company may have faced challenges in managing production costs or pricing strategies during that period.
Net Profit Margin:
Net profit margin measures the percentage of revenue retained as net income after all expenses. Hero MotoCorp’s net profit margin has shown a declining trend from 12.59% in 2020 to 8.60% in 2023. This indicates that the company’s profitability has decreased over the years, possibly due to rising expenses or declining sales.
Return on Equity (ROE):
ROE indicates the profitability of a company relative to its shareholders’ equity. Hero MotoCorp’s ROE has shown a decreasing trend, indicating a decline in profitability generated from shareholders’ investments. This could be attributed to factors such as lower net income or increased equity.
Liquidity Ratio
Current Ratio:
The current ratio measures a company’s ability to meet short-term liabilities with its current assets. Hero MotoCorp’s current ratio has declined over the years but remains above 1, indicating that the company has sufficient current assets to cover its short-term obligations. However, the decreasing trend warrants attention as it may indicate a potential liquidity strain.
Quick Ratio (Acid-Test Ratio):
The quick ratio assesses a company’s ability to meet short-term liabilities using its most liquid assets. Hero MotoCorp’s quick ratio has also experienced a downward trend, suggesting a decrease in liquidity when excluding inventory from current assets. This may signal challenges in meeting immediate financial obligations without relying on inventory liquidation.
Solvency Ratio
Debt to Equity Ratio:
This ratio evaluates the proportion of debt financing relative to equity. Hero MotoCorp’s decreasing debt to equity ratio indicates a lower reliance on debt for financing operations, which enhances the company’s financial stability and reduces the risk of default.
Interest Coverage Ratio:
The interest coverage ratio measures a company’s ability to pay interest expenses on outstanding debt. Hero MotoCorp’s interest coverage ratio has declined over the years but remains at satisfactory levels, indicating that the company generates sufficient operating income to cover interest expenses.
Efficiency Ratio
Inventory Turnover Ratio:
Hero MotoCorp’s inventory turnover ratio reflects the efficiency of inventory management. The increasing trend suggests that the company is selling its inventory more frequently, which reduces holding costs and improves cash flow efficiency.
Account Receivable Turnover Ratio:
This ratio assesses the efficiency of credit management and collection of receivables. Hero MotoCorp’s consistent account receivable turnover ratio indicates effective credit policies and timely collection of dues from customers, contributing to healthy cash flows.
Valuation Ratio
Price to Earning Ratio (P/E):
Hero MotoCorp’s declining P/E ratio may indicate that the company’s stock is undervalued relative to its earnings potential. This could present an attractive investment opportunity for investors seeking undervalued stocks.
Price to Book Ratio (P/B):
The decreasing trend in Hero MotoCorp’s P/B ratio suggests that the market may undervalue the company’s tangible assets relative to its market capitalization. This could imply potential upside for investors looking for assets trading below their book value.
Growth Ratio
Earning per Share (EPS) Growth:
Hero MotoCorp’s EPS growth indicates the company’s ability to generate higher earnings per share for its shareholders over the years. The fluctuating trend suggests variability in profitability, which may be influenced by factors such as economic conditions or industry competition.
Revenue Growth:
The consistent revenue growth trajectory reflects Hero MotoCorp’s ability to expand its top line and capture market share. This indicates strong demand for the company’s products and effective business strategies driving revenue growth.
In conclusion, a detailed analysis of Hero MotoCorp Ltd.’s financial ratios provides valuable insights into the company’s performance, profitability, liquidity, solvency, efficiency, valuation, and growth prospects. Investors and stakeholders can leverage these insights to make informed decisions regarding investment or partnership opportunities with Hero MotoCorp.
Technical Analysis of Hero MotoCorp Ltd
Technical analysis of Hero MotoCorp Ltd involves evaluating price movements and trading volumes to forecast future price movements. Technical analysis depends on charts and statistical indicators. analysts use various techniques, such as trend analysis, chart patterns, and technical indicators like moving averages or relative strength index (RSI), to identify potential buying or selling opportunities for Hero MotoCorp Ltd. The main goal of technical analysis of Hero MotoCorp Ltd share price is to predict future price movements based on historical data and market psychology, helping investors make informed decisions about when to enter or exit trades. So, bellow we are explaining Various techniques as of 9th May 2024 for technical analysis of Hero MotoCorp Ltd.
Price Action
Price action and price level of Hero MotoCorp Ltd (As of 9th May 2024) | |||
Price action | Daily Timeframe | Weekly Timeframe | Monthly Timeframe |
Candlestick | Strong Bullish Candlestick | Bullish Continuous Candlestick | Bullish Candlestick |
Chart Pattern | Bullish Flag Pattern | Bullish Flag Pattern | Strong Consolidated Pattern |
Price Support Level | 4425-4470 | 4350-4400 | 4100-4200 |
Price Level | 4764.90 is Current price | 52 weeks High 4949.05 | 52 weeks low 2466 |
As of May 9th, 2024, Hero MotoCorp Ltd’s price action and levels exhibit distinct characteristics across different timeframes, providing valuable insights for investors and traders.
Daily Timeframe:
In the daily timeframe, Hero MotoCorp’s price action is characterized by a Strong Bullish Candlestick, indicating aggressive buying momentum. Buyers broke through the 4600 level with high volume, marking the highest volume seen in the past year. This suggests strong bullish sentiment and potential upward movement in the short term.
The accompanying Bullish Flag price action Pattern signifies a temporary pause in the uptrend before potential continuation. This breakout above resistance levels, with volume support, strengthens the bullish outlook for the stock.
Price support in the daily timeframe ranges from 4425 to 4470, indicating levels where buying interest may increase and potentially halt downward movements.
The current price stands at 4764.90, reflecting the bullish sentiment and recent upward momentum.
Weekly Timeframe:
On the weekly timeframe, Hero MotoCorp displays a Bullish Continuous Candlestick pattern with decent volume, suggesting a sustained uptrend. This consistent buying activity reinforces positive sentiment and indicates potential further upside in the medium term.
A Bullish Flag Pattern activation, accompanied by volume, strengthens the bullish bias. This breakout above resistance levels signals potential continuation of the uptrend and presents opportunities for traders.
Price support in the weekly timeframe is identified between 4350 and 4400, acting as crucial levels to watch for potential reversals or entry opportunities.
Monthly Timeframe:
In the monthly timeframe, Hero MotoCorp exhibits a Bullish Candlestick pattern, indicating optimism and potential for further gains. With a lot of time due, there’s a high probability of breaking the 4900 level and reaching the 52-week high.
A Strong Consolidated Pattern suggests a period of accumulation before a potential breakout, reinforcing the bullish sentiment and indicating potential for significant upward movement in the long term.
Price support in the monthly timeframe ranges from 4100 to 4200, serving as important levels to monitor for potential reversals or entry opportunities.
The 52-week high of 4949.05 and the 52-week low of 2466 highlight the stock’s recent price range and provide insights into potential price targets or reversals.
In summary, Hero MotoCorp Ltd’s price action and levels across different timeframes present varying opportunities for traders and investors. Understanding these dynamics can help in formulating informed trading strategies and capitalizing on potential price movements.
Indicators Use for Technical Analysis
Bolinger Band (BB):
Bolinger Band Price level in Hero MotoCorp Ltd (As of 9th May 2024) | |||
| Upper Band | Median | Lower Band |
Bolinger Band | 4711.03 | 4457.35 | 4203.68 |
The daily candlestick broke above the upper band, closing with significant volume. This indicates strong bullish momentum, suggesting potential further upward movement in the short term.
Positioned at 4457.35, the median level offers stable support in the short term. This stability implies a potential pivot point for price activity, serving as a reference for near-term market sentiment.
At 4203.68, the lower band demonstrates substantial support in the medium term. It signifies potential buying opportunities and acts as a support level for price action. Investors may consider this level favorable for initiating long-term positions.
Moving Average (MA):
Moving Average price level in daily candlestick of Hero MotoCorp Ltd (As of 9th May 2024) | ||
Moving Average | 100 Day | 200 Day |
Simple Moving Average (SMA) | 4441.08 | 3796.66 |
Exponential Moving Average (EMA) | 4323.15 | 3942.01 |
Simple Moving Average (SMA):
Positioned at 4441.08, the 100-day SMA serves as a short-term support level. This indicates that the stock’s price has been trending upwards in the recent past, providing a potential buffer against short-term downward movements.
At 3796.66, the 200-day SMA offers medium-term support. This suggests that the stock’s price has been on a longer-term uptrend, providing a stronger support level for medium-term price action.
Exponential Moving Average (EMA):
100-day EMA, positioned at 4323.15, indicates short-term price trends with a focus on recent data points. This moving average provides insight into the stock’s short-term price direction and serves as a reference for short-term traders.
Positioned at 3942.01, the 200-day EMA offers medium-term support. This moving average gives weight to recent price data while still considering longer-term trends. It indicates a supportive price level for medium-term investors and traders.
Data Analysis
Open Interest Put Call Ratio of Hero MotoCorp Ltd:
Open Interest Put Call Ratio of Hero MotoCorp Ltd | ||||
Expiry Date | Put Open Interest | Call Open Interest | PCR OI | Signal |
30/05/2024 | 1545.00 K | 2777.10 K | 0.556 | Bullish |
27/06/2024 | 35.70 K | 21.75 K | 1.64 | Bearish |
With a PCR OI of 0.556, indicating more put options held compared to call options, the sentiment is bullish for the 30th of May, 2024. Investors are inclined towards buying put options, suggesting anticipation of a potential decrease in the stock’s price.
Conversely, with a PCR OI of 1.64, indicating more call options held compared to put options, the sentiment is bearish for the 27th of June, 2024. Investors are leaning towards buying call options, suggesting anticipation of a potential increase in the stock’s price.
Volume Put Call Ratio of Hero MotoCorp Ltd:
Volume Put Call Ratio of Hero MotoCorp Ltd | ||||
Expiry Date | Put Total Contracts | Call Total Contracts | PCR Volume | Signal |
30/05/2024 | 52309.00 | 119880.00 | 0.436 | Bullish |
27/06/2024 | 105.00 | 92.00 | 1.14 | Bearish |
With a PCR Volume of 0.436, indicating more put contracts traded compared to call contracts, the sentiment is bullish for the 30th of May, 2024. This suggests investors are actively trading more put options, anticipating a potential decrease in the stock’s price.
Conversely, with a PCR Volume of 1.14, indicating more call contracts traded compared to put contracts, the sentiment is bearish for the 27th of June, 2024. This suggests investors are actively trading more call options, anticipating a potential increase in the stock’s price.
Conclusion
In simple terms, Hero MotoCorp Ltd. looks like a good choice for investing in the motorcycle and scooter industry. It’s doing well because it’s a leader in the market, it’s known worldwide, and it’s focused on making new and eco-friendly products. This all suggests that the company has a solid base for growing in the future. Also, when we look at how the stock is performing based on charts and patterns, like how the candlestick patterns show buyers are interested and there’s support for the stock’s price, it adds to the positive picture.
But remember, investing is always a bit risky. So, it’s important for anyone thinking about investing in Hero MotoCorp Ltd. to do their homework. That means looking into the company’s finances, understanding how the market works, and considering any risks involved. By doing this, investors can make smarter decisions that match what they want to achieve and how much risk they’re willing to take.
FAQs
- What is Hero MotoCorp Ltd and what does it do?
Hero MotoCorp Ltd is a leading manufacturer of motorcycles and scooters based in New Delhi, India. It produces a wide range of two-wheeler vehicles catering to various segments of the market.
- Why should I consider investing in Hero MotoCorp Ltd?
Hero MotoCorp is the world’s largest manufacturer of motorcycles and scooters, enjoying a dominant position in the Indian two-wheeler market. Its strong market presence, brand recognition, and innovative products make it an attractive investment opportunity.
- How can I buy shares of Hero MotoCorp Ltd?
You can buy shares of Hero MotoCorp Ltd through a stockbroker or online trading platforms that offer access to the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) in India.
- What factors should I consider before investing in Hero MotoCorp Ltd?
Before investing in Hero MotoCorp Ltd, consider factors such as the company’s financial performance, market position, competitive landscape, regulatory environment, and overall economic conditions.
- What is the current financial performance of Hero MotoCorp Ltd?
The current financial performance of Hero MotoCorp Ltd can be evaluated by analyzing its financial statements, including revenue, profit margins, earnings per share (EPS), and return on equity (ROE).
- Does Hero MotoCorp Ltd pay dividends to its shareholders?
Yes, Hero MotoCorp Ltd regularly pays dividends to its shareholders as a way to distribute profits. The dividend amount and frequency may vary depending on the company’s performance and dividend policy.
- What risks are associated with investing in Hero MotoCorp Ltd?
Risks associated with investing in Hero MotoCorp Ltd may include market volatility, competition, regulatory changes, economic downturns, technological advancements, and currency fluctuations.
- How can I stay updated on news and developments related to Hero MotoCorp Ltd?
You can stay updated on news and developments related to Hero MotoCorp Ltd by following financial news websites, subscribing to industry newsletters, monitoring the company’s official announcements, and participating in investor conferences or webinars.
- Are there any long-term growth prospects for Hero MotoCorp Ltd?
Hero MotoCorp Ltd has significant long-term growth prospects due to its strong brand, expanding product portfolio, growing domestic and international markets, and focus on innovation and sustainability.
- Can I invest in Hero MotoCorp Ltd through mutual funds or exchange-traded funds (ETFs)?
Yes, you can invest in Hero MotoCorp Ltd indirectly through mutual funds or ETFs that include the company’s stock in their portfolio. These funds offer diversification and professional management while providing exposure to Hero MotoCorp Ltd’s potential growth.
