Hero Honda felt the pressure of market disappointment on Monday even as it announced a growth of 6.3% in motorcycle sales in the month of January 2003.
No sooner trading commenced, the scrip of the largest motorcycle maker in the world dipped 0.57% to Rs 253.50. A total of 11,171 Hero Honda shares changed hands on BSE by 10:05 IST.
But this came in contrast to the scrip's fortunes over the previous six sessions (between 24 and 31 January 2003), when it climbed 8% to 254.95 from Rs 236. The rise manifested on market hopes that the company would declare a substantial dividend, of Rs 17-18, for the current financial year. In 25 sessions between 19 December 2002 and 4 January 2003, the scrip shed 16.8% from Rs 283.60.
Hero Honda registered a 6.3% rise in motorcycle sales to 145,000 units in January 2003 compared to the same month in the previous year. But compared to the December 2002 sales figures of 125,000 units, the growth rate of 16% is redeeming. In the April 2002-January 2003 period (10 months), sales rose 22.7% to 1.42 million units from 1.16 million in the year-ago period.
Even as the motorcycle sales for January are being deemed modest, the market has been disappointed that the company's own target of 173,000 units for the month has been missed. The company has set out a full year (FY 2002-03) target of 1.8 million vehicles. Hero Honda will have to sell over 186,000 vehicles over the next two months to fulfill that sales target.
Analysts are not entirely disappointed, however, considering the fact that the company is facing tough competition from other players in the motorcycle segment like Bajaj Auto and TVS Motor. They fear that the annual target itself may be quite difficult to achieve.
On Friday (31 January 2003), Hero Honda was included in the derivatives segment of the BSE as well as that of NSE. The inclusion in the derivatives list is expected to generate more interest in the stock.
On 10 January 2003, Hero Honda unveiled its third quarter (ended 31 December 2002) results. It registered a 14.7% rise in net profit to Rs 152.8 crore (Rs 1.52 billion), compared to Rs 133.22 crore (Rs 1.33 billion) in the corresponding period of the previous year. Net sales increased by 12.8% to Rs 1,376.04 crore (Rs 13.76 billion) from Rs 1,219.47 crore (Rs 12.19 billion).
Both net profit and sales were in line with market expectations. A capitalmarket.com poll of nine automobile analysts had projected the company's net profit growth in the range of 13.2% to 21.3% to between Rs 150.77 crore (Rs 1.5 billion) and Rs 161.6 crore (Rs 1.61 billion). Sales were estimated between Rs 1,340.3 crore (Rs 13.4 billion) and Rs 1,392.8 crore (Rs 13.92 billion), up 9.9-14.2%.
FIIs have a substantial holding of 23.23% in Hero Honda, while domestic funds have 5.68%. The Indian public owns 17.32% and private corporate bodies and NRIs/OCBs 1.76%. The promoters - the Munjal group and Honda Motor Company of Japan hold a 26% stake each in the company
BSE Code: 500182