Hero MotoCorp shareholders are betting that people will go for cheaper bikes after the pandemic
- Hero MotoCorp is set to announce its fourth-quarter results on June 9.
- The motorcycle giant saw a steep 42% decline in March sales due to bad market sentiment.
- Hero MotoCorp became the first two-wheeler manufacturer in the country to resume operations as it reopened three plants on May 4.
- The company has about 42% total market share in the Indian two-wheeler category with a market cap of ₹46,764 crore.
AdvertisementHero MotoCorp, the largest two-wheeler manufacturer in the world, is set to announce its fourth-quarter results tomorrow (June 9) for the quarter ending March 2020. Although the coronavirus lockdown period was just for one week in the relevant period, it is already known that the motorcycle giant saw a steep 42% decline in sales due to bad market sentiment.
However, the shares of Hero Moto are nearly back to the pre-COVID levels— up almost 52% since March 31. The stellar rally in Hero’s shares could also be because of the news that said the firm had sold nearly 10,000 motorcycles within a week after reopening.
|Stock||Gains since March 31|
Analysts expect the people to spend less on four-wheelers as a monetary impact of coronavirus pandemic on their budget due to layoffs and salary cuts. “We expect downtrading to benefit Hero as it has a two-thirds market share in the entry/executive segments (overall market share of 52% in motorbikes),” said a report from HDFC Securities dated May 11.
Moreover, around half of the company’s domestic sales come from rural regions. According to analysts, the impact of the pandemic has been relatively less outside the big cities like Mumbai and Delhi.
Early signs of pent up demand
On March 22, the government announced a nationwide lockdown to deal with the COVID-19 pandemic and Hero MotoCorp to halt operations until May 4. Hero MotoCorp became the first two-wheeler manufacturer in the country to resume operations as it reopened three plants — Dharuhera and Gurgaon in Haryana and Haridwar in Uttarakhand, the company said in a statement.
The company has about 42% total market share in the Indian two-wheeler category, according to Business Standard.
The company has now launched an online sales platform — eSHOP. The customers can choose the model, colour and accessories online and the car will be delivered at home. “The Sales Assistant handles all the customers' queries and guides them through the remaining steps like documentation, finance, invoicing, insurance, registration and delivery (optional Home delivery).,” said the company’s statement.
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