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● We met Mr Ravi Sud, CFO of Hero Honda. He highlighted that on
the back of continued strong demand from semi-urban and rural
markets, sales growth momentum continues to be robust.
● The company has been reporting monthly sales at 0.5m for the
last three months, which has matched the retail offtake and dealer
inventory levels remain low (three weeks of sales). Management
maintained its 12-14% volume growth guidance for the year.
● With company’s mainstay semi-urban, rural markets little affected
by rate increases and driving industry sales, Hero Honda
continues to see market share gains. YTD market share is up 3%.
Company also plans to take 1-1.5% price increase this month to
offset the current commodity cost pressures on margins.
● Management is comfortable maintaining a high dividend payout
ratio given strong cash generation on the back of which we expect
ROEs to expand to 90%+. With its 6% dividend yield and robust
volume growth outlook, Hero Honda continues to be our top pick
in the Indian auto sector. Maintain OUTPERFORM.
● Hero Honda is a CS NJA Focus List stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● We met Mr Ravi Sud, CFO of Hero Honda. He highlighted that on
the back of continued strong demand from semi-urban and rural
markets, sales growth momentum continues to be robust.
● The company has been reporting monthly sales at 0.5m for the
last three months, which has matched the retail offtake and dealer
inventory levels remain low (three weeks of sales). Management
maintained its 12-14% volume growth guidance for the year.
● With company’s mainstay semi-urban, rural markets little affected
by rate increases and driving industry sales, Hero Honda
continues to see market share gains. YTD market share is up 3%.
Company also plans to take 1-1.5% price increase this month to
offset the current commodity cost pressures on margins.
● Management is comfortable maintaining a high dividend payout
ratio given strong cash generation on the back of which we expect
ROEs to expand to 90%+. With its 6% dividend yield and robust
volume growth outlook, Hero Honda continues to be our top pick
in the Indian auto sector. Maintain OUTPERFORM.
● Hero Honda is a CS NJA Focus List stock.
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