Hero MotoCorp posts all time high profit in their first quarter after split with Honda Motors

When Hero Honda announced last year that they were going to split their 26 year old partnership with Honda Motors, the shock waves were felt across India. Within a few days, their share prices fell from well above 2200 to 1600 and it kept deteriorating till it reached an all time low in recent times of 1390 February this year.

But we fall to get up. Hero MotoCorp, under the leadership of Munjals, has shown exceptional recovery trend. In their first quarter without Honda Motors, July-Sep 2011, they have posted an all time high profit and their share prices today are well above 2100 today.

The real test of Hero MotoCorp will began beyond 2014, which is when they will have to get their own technology in their motorcycles and moto-scooters. Mr Mahantesh Sabarad, Analyst, Fortune Equity Brokers India Ltd., says, “Hero is covered for technology until 2014, beyond that, they will have to survive on their own. Hero will have to step up because the competition is not just Bajaj and TVS but also their former partner Honda, which can be a potentially large competitor.”

As of now, Hero MotoCorp are expected to register an increase in sales by over 27% for the month of October 2011. Mr Ravi Sud, CFO, Hero MotoCorp said , “We’re working on de-bottlenecking and expanding our plants. They will work on three shifts from next year. After a couple of quarters we may have 7 million plus capacity. We’re producing 8,000 a day at Haridwar – the plan is to take this to 9,500 a day over the next 6 months.”

Hero MotoCorp are on the verge of launching Impulse. On that Mr Anil Dua, Senior Vice-President, Marketing & Sales, said, “The numbers for Impulse this month will be relatively small, as we have just launched on Monday and it’s a new category. We’re not targeting a niche market and looking at good volumes at a good price – thinking (sales of) several hundreds, at least 1,000 every month.”