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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Company annual report under its new corporate identity expresses its eagerness to rapidly
upgrade R&D capability with help of global experts and technology providers, so as to
continue to delight the customer with advanced products and to set new industry
benchmarks. As stock nears our target price, Buy at declines.
Rural franchise strength reiterated
In the annual report, company highlights that its touch points in India have crossed five
thousand mark (growth of 5.2% yoy to 5006 and a CAGR of 13.4% in last 3-years).
In FY11, under "Har Gaon Har Angan" program, company covered 1,30,000 villages
across the country, including villages with a population of up to 2000.
Company crosses 8.2mn members under its Goodlife loyalty programme, India's largest
customer relationship programme, which helps customers get loyalty discounts for
spares and services availed from Hero MotoCorp dealerships.
Mission and Vision statements expanded to include global ambitions
New Vision statement " The story of Hero Honda began with a simple vision – the vision
of a mobile and an empowered India, powered by its bikes. Hero MotoCorp Ltd.,
Company’s new identity, reflects its commitment towards providing world class mobility
solutions with renewed focus on expanding Company’s footprint in the global arena."
New mission statement " Hero MotoCorp’s mission is to become a global enterprise
fulfilling its customers’ needs and aspirations for mobility, setting benchmarks in
technology, styling and quality so that it converts its customers into its brand advocates.
The Company will provide an engaging environment for its people to perform to their true
potential. It will continue its focus on value creation and enduring relationships with its
partners
The board of the company is rejigged by introduction of Bain Capital Managing Director Paul
Edgerley, which we feel can help company gain international market expertise needed for
achieving global ambition.
Management also highlights that the company has implemented PLM (Product Lifecycle
Management) and is in process of upgrading it. It says, at a strategic level, R&D department
is also exploring the new technical alliances to cater to the latest requirements of new
products, segments and geographies.
Remains tight fisted on costs and focuses on medium-term opportunity
Inspite being associated with two global sport events in FY11 i.e. Commonwealth games and
Cricket world cup, it has succeeded to bring down advertisement and promotion expenses as
net sales to 2% of sales as compared to 2.3% in FY10.
In the context of rising input costs, management highlights that it is now pursuing an
aggressive policy of multiple sourcing for components. In FY11, raw material cost increased
by 500 bps to form 72.7% of net sales.
Cash and liquid investment in hand as on March 31st 2011 was Rs.52bn, however adjusting
for final dividend to be paid of Rs.10.4bn, this comes down to Rs.41.6bn i.e Rs.104 per share.
The stock has seen sharp appreciation in recent weeks to reach our target price. We
recommend Buy at declines, as we remain positive for medium-term opportunities and
maintain our 10% above Bloomberg consensus EPS estimate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Company annual report under its new corporate identity expresses its eagerness to rapidly
upgrade R&D capability with help of global experts and technology providers, so as to
continue to delight the customer with advanced products and to set new industry
benchmarks. As stock nears our target price, Buy at declines.
Rural franchise strength reiterated
In the annual report, company highlights that its touch points in India have crossed five
thousand mark (growth of 5.2% yoy to 5006 and a CAGR of 13.4% in last 3-years).
In FY11, under "Har Gaon Har Angan" program, company covered 1,30,000 villages
across the country, including villages with a population of up to 2000.
Company crosses 8.2mn members under its Goodlife loyalty programme, India's largest
customer relationship programme, which helps customers get loyalty discounts for
spares and services availed from Hero MotoCorp dealerships.
Mission and Vision statements expanded to include global ambitions
New Vision statement " The story of Hero Honda began with a simple vision – the vision
of a mobile and an empowered India, powered by its bikes. Hero MotoCorp Ltd.,
Company’s new identity, reflects its commitment towards providing world class mobility
solutions with renewed focus on expanding Company’s footprint in the global arena."
New mission statement " Hero MotoCorp’s mission is to become a global enterprise
fulfilling its customers’ needs and aspirations for mobility, setting benchmarks in
technology, styling and quality so that it converts its customers into its brand advocates.
The Company will provide an engaging environment for its people to perform to their true
potential. It will continue its focus on value creation and enduring relationships with its
partners
The board of the company is rejigged by introduction of Bain Capital Managing Director Paul
Edgerley, which we feel can help company gain international market expertise needed for
achieving global ambition.
Management also highlights that the company has implemented PLM (Product Lifecycle
Management) and is in process of upgrading it. It says, at a strategic level, R&D department
is also exploring the new technical alliances to cater to the latest requirements of new
products, segments and geographies.
Remains tight fisted on costs and focuses on medium-term opportunity
Inspite being associated with two global sport events in FY11 i.e. Commonwealth games and
Cricket world cup, it has succeeded to bring down advertisement and promotion expenses as
net sales to 2% of sales as compared to 2.3% in FY10.
In the context of rising input costs, management highlights that it is now pursuing an
aggressive policy of multiple sourcing for components. In FY11, raw material cost increased
by 500 bps to form 72.7% of net sales.
Cash and liquid investment in hand as on March 31st 2011 was Rs.52bn, however adjusting
for final dividend to be paid of Rs.10.4bn, this comes down to Rs.41.6bn i.e Rs.104 per share.
The stock has seen sharp appreciation in recent weeks to reach our target price. We
recommend Buy at declines, as we remain positive for medium-term opportunities and
maintain our 10% above Bloomberg consensus EPS estimate.
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