Hero Honda Motors Limited - SWOT Analysis

Datamonitor's Hero Honda Motors Limited - SWOT Analysis company profile is the essential
source for top-level company data and information. Hero Honda Motors Limited - SWOT
Analysis examines the company’s key business structure and operations, history and products,
and provides summary analysis of its key revenue lines and strategy.

Hero Honda Motors is engaged in the manufacturing and marketing of motorcycles and spare
parts. The company is a joint venture between Hero Group of India and Honda Motors of Japan.
Hero Honda primarily operates in India. It is headquartered in New Delhi, India and employs
over 4,500 people. The company recorded net sales and other income of INR125,398.4 million
($2,736.2 million) during the financial year ended March 2009 (FY2009), an increase of 19.2%
over FY2008. The operating profit of the company was INR17,497.8 million ($381.8 million)
during FY2009, an increase of 27.3% over FY2008. The net profit was INR12,817.6 million
($279.7 million) in FY2009, an increase of 32.4% over FY2008.

Scope of the Report

- Provides all the crucial information on Hero Honda Motors Limited required for business and
competitor intelligence needs
- Contains a study of the major internal and external factors affecting Hero Honda Motors
Limited in the form of a SWOT analysis as well as a breakdown and examination of leading
product revenue streams of Hero Honda Motors Limited
-Data is supplemented with details on Hero Honda Motors Limited history, key executives,
business description, locations and subsidiaries as well as a list of products and services and the
latest available statement from Hero Honda Motors Limited

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PINC Research is bullish on Hero Honda Motors and has recommended buy rating on the stock with a
target of Rs 2049, in its August 30, 2010 research report.

“Hero Honda Motors (HH) took a round of price hikes across all products in Jun'10. The price hike was in
the range of Rs 500 to Rs 1000 across models. This increase was taken to pass on engine up gradation
cost to comply with new emission norms and a hardening in input costs. The full benefits of the price hike
will be visible during the current quarter. In addition prices for its flagship Splendor model were increased
in August to the tune of Rs 500."
ALSO READ

 See previous views by PINC Research

 See what other Experts & Brokerages are saying about Hero Honda
 See messages about Hero Honda

"We expect HH to clock volumes of 5.2 million units during FY11. Profitability of the company is likely to
improve from the levels of Q1FY11 due to pricing actions and lower input costs. The stock is currently
trading at 15.7x and 13.9x FY11E and FY12E earnings respectively. Since, our last update the stock has
corrected by over 5%. We see current valuations to be attractive and upgrade the stock to a ‘BUY’ with
target price of Rs 2049 discounting FY12E earnings 16x,” says PINC Research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are
their own, and not that of the website or its management.Moneycontrol.com advises users to check with
certified experts before taking any investment decisions.
  Hero Honda: Decline in profitability, reduce
During the quarter, due to the increased raw material cost EBITDA per vehicle de-grew by 24.8% y-o-y
and EBITDA margins for the quarter were down 490bps y-o-y to 13.4% (14.0% in Q1FY11). As a result,
net profit per vehicle de-grew by 22.1% y-o-y at Rs4.9bn. At CMP of Rs1865, the stock is trading at 15.1
times its FY11E EPS and FY12E EPS and is fairly valued. The stock is expected to tread in the narrow
range as muted earnings growth would restrict the potential upside and hence investors are
recommended to reduce on the stock
Prabhudas Lilladher, www.valuenotes.com
30 October 2010 2.  Hero Honda Q2FY11: Reports highest decline in profitability
Raw material cost was higher for the quarter due to higher cost of steel and tyres. As a result, EBITDA
per vehicle de]grew by 24.8% y-o-y and EBITDA margins for the quarter were down 490bps y-o-y to
13.4% (14.0% in Q1FY11). As a result, net profit per vehicle de]grew by 22.1% y-o-y at Rs4.9 bn.
Investors are recommended to maintain reduce
Prabhudas Lilladher, www.valuenotes.com
29 October 2010 3.  Hero Honda: Sep10 volumes below estimates
Hero Honda's volume continues to disappoint over last few months, led by supply constraints and
other issues. As a result, it is losing out on strong demand at retail level and might see impact on its
festive sales. The stock trades at 16.2 times FY11E EPS of Rs114.2 and 13.8 times FY12 EPS of Rs134.6.
Maintain Buy
Motilal Oswal, www.valuenotes.com
4 October 2010 4.  Hero Honda: Hit by higher RM cost, hold
While the company posted a positive growth in the sales numbers, it was the margins which led to the
disappointment. The margins were eroded by the rising commodity prices and the additional cost
incurred on account of conversion to new emission standards. At the CMP of Rs1785, the stock is trading
at 14.1 times its FY11E EPS of Rs126. Investors are recommended to hold the stock for a price target of
Rs2016
KRChoksey, www.valuenotes.com
30 August 2010 5.  Hero Honda: Results below expectations, hold
Hero Honda Motors (HHML) Q1FY11 results are below Way2wealth's expectations as commodity
cost pressures and emission norm upgradation costs accounting for an increase of ~Rs400/vehicle have
pulled down the profitability margins on a y-o-y basis by 170-300bps. It has lost market share of ~11% at
44.1%, to its peers like Bajaj Auto and TVS Motors on a q-o-q basis
Way2wealth, www.valuenotes.com
30 July 2010 6.  Hero Honda: Sell
Mounting competition and new launches from Bajaj Auto have cut into Hero Honda's market share. At
the CMP of Rs2023, the stock is trading at 17 times its FY11E and is fairly valued. Investors are
recommended to sell the stock
Anand Rathi, www.valuenotes.com
1 July 2010 7.  Hero Honda Q4FY10 results: Robust revenues
Hero Honda came out with its Q4FY10 results. It reported robust revenues of Rs15,758.2 cr, up by
27.9%. Its operating profit for year stood at Rs2,664.6 cr (up 58%). PAT rose sharply by 74% y-o-y to
Rs2,231.8 cr
HDFC Sec, www.valuenotes.com
21 April 2010 8.  Hero Honda Motors: Steps up rural touch-points
Over 500 rural sales executives of the company dealers are now busy meeting the sarpanch, headmaster
& the anganwadi workers in villages all over the country. They are also visiting potential customers at
their homes, inviting them to drop in at the company's dealerships which might be located a few kms
away. At CMP, the stock is trading at 18.68 times and 16.94 times for FY10E and FY11E respectively
Firstcall India Equity, www.valuenotes.com
6 April 2010

Hero Honda Motors Limited is an India-based company engaged in the manufacture of motorcycles. The
Company is engaged in manufacturing of two wheelers. Hero Honda bikes are manufactured across three
manufacturing facilities. Two of these are based at Gurgaon and Dharuhera, which are located in the state
of Haryana in northern India. The third manufacturing plant is based at Haridwar, in the hill state of
Uttrakhand. The Company is a joint venture between India's Hero Group and Japan's Honda Motor Co.
The Company offers a range of bikes starting from CD Dawn, CD Deluxe, Splendor Plus, Splendor NXG,
Passion and Passion Pro. The 125 cubic centimeter segment offers Glamour, Super Splendor and Glamour
F1. It also has an offering called Achiever in 135 cubic centimeter segment. In the 150 cubic centimeter
and above the Company offers brands like Hunk, CBZ X-treme, Karizma and the Karizma ZMR. It also
offers a 100 cubic centimeter scooter, Pleasure.
  Wright Quality Rating: BAA1 Rating Explanations
   
 
   
 

 
  Stock Data: Recent Stock Performance:
1 Week 7.1%  13 Weeks 4.9% 
  Current Price (11/19/2010): 1,945.70
(Figures in Indian Rupees) 4 Weeks 1.5%  52 Weeks 17.8% 
 
Hero Honda Motors Limited Key Data:

  Ticker: 500182 Country: INDIA

  Exchanges: BOM Major Industry: Automotive

Diversified Automotive
    Sub Industry:
Mfrs.
 157,581,800,000
  2010 Sales Employees: 4,751
(Year Ending Jan 2011).

  Currency: Indian Rupees Market Cap: 388,531,968,750

  Fiscal Yr Ends: March Shares Outstanding: 199,687,500

  Share Type: Ordinary Closely Held Shares: 109,749,305

 
 
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Introduction

The Indian two-wheeler industry is experiencing a major shift in its shape and
structure. The established players in the industry are taking a hard look at their
portfolio of products and are in the process of reshuffling them to meet the
expectations of customers. The beneficiary is of course the consumer, who has an
increased array of products to choose from.

The last four-five years have brought about a great change in the consumer
preferences for two-wheelers. The market leaders of yesteryears are being driven
to maintain their leadership position in the forthcoming years. Those who have
had a great going in the last few years are fighting hard to retain their new
supremacy. The two-wheeler industry is perhaps the most happening place in
terms of new models launched, upgraded products and innovative marketing
techniques. Gone are the days of regulation when the production of scooters and
motorcycles was limited to two or three brands and the number of products
produced was decided by the Government; today the Indian two-wheeler market
is highly competitive with numerous players who offer anything and everything a
consumer demands and that too at affordable price. From a sellers market where
one had to wait for a scooter for 12 years to the days when you can just walk into
any showroom and drive out in the vehicle of your choice, the market of two-
wheelers in India has come a long way. But this is only the beginning of the
transformation.

The Industry

The Indian two-wheeler industry is dominated by three players, Bajaj, Hero

Honda and TVS Suzuki, who account for 80 percent of the total two-wheeler
market. The other players including Kinetic Engineering, LML and others account
for the remaining 20 percent of the market. The industry can be divided into three
broad segments: Scooters, motorcycles and mopeds. In the scooters segment Bajaj
is the market leader, Hero Honda is the market leader in the motorcycles segment
and in the segment of mopeds, TVS controls the major chunk of the market.

Most Indian players in the two-wheeler industry had been into some kind of
strategic alliance, technical collaboration or joint venture with foreign players,
mainly Japanese firms. Hero-Honda, is a joint venture between the Munjal-
promoted Hero Group and Honda Motor Co. of Japan; TVS-Suzuki was an
alliance with TVS and Suzuki Motors (till September 2001); Bajaj-Kawasaki a
joint venture between Bajaj Motors and Kawasaki; and Yamaha-Escorts, a joint
venture between Escorts and Yamaha Motor Corp. (till June 2001).

Hero Honda

The story of motorcycles in India is a good case study of how fortunes change
overnight. Motorcycles in India were hardly popular and Hero Honda was the
only player, which had carved a niche for motorcycles. Its market was small and
limited while scooters ruled the roost but today, it is one of the biggest success
stories. Its established presence in the motorcycle segment had stood it in good
stead in this phase of boom in motorcycle sales. The fact that no other player
commanded the brand name which Hero Honda enjoyed in motorcycle segment
also added up to its success. In addition most other players such as Bajaj, TVS,
LML etc., took time to assimilate the change in customer preferences and come
up with models to buck the trend. Meanwhile Hero-Honda's designs were ready
on the platter. Its R&D had been able to come up with models such as CBZ,
Passion etc., in the premium segment to capture the hot demand. Riding high on
the expectations of consumers, Hero Honda has successfully crossed over the one
million units mark in motorcycle sales. Its popular model Splendor is the largest
selling motorcycle in the world.

To give a boost to its youthful image the company has chosen Saurav Ganguly
and Hrithik Roshan as brand ambassadors. The company has also embarked on in-
film advertising in a forthcoming Hindi movie. In order to expand its reach to
rural areas, the company has recently launched a marketing initiative in towns
with a population of less than 50,000 in Uttar Pradesh. As a part of this initiative,
it started a mobile workshop and showroom, through which people will be able to
gather knowledge about the companies' vehicles and can also buy them. These
mobile marketing efforts are focused on Splendor and Joy.
Attached Files
Hero Honda.doc.pdf (611.9 KB, 2378 views)

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RE: Hero honda customer satisfaction
CUSTOMER
SATISFACTION
& BUYING
BEHAVIOR OF
HEROHONDA
Objectives of the
study:
-To know the
customers
expectations
towards hero
Honda
-to find out the
customer opinion
regarding Various
aspect of the bike.
-To give the
appropriate
suggestion to the
company
regarding the
performances

The brand
identity
This brand is the
visual
expression of the
ought and the
action it conveys
to everyone the
intention to
constantly
inspire the
confidence

CONSUMER
BUYING
BEHVIOUR
The field of
consumer behavior
studies how
individuals, groups
and organization
select, buy, use
and dispose of
goods, service,
ideas, or
experience to
satisfy their
needs and desires.
The customers are
responding to
Influences that
change their mind
at the last minute.
A buyer makes
take a decision
whether save or
spend the money

Target audience:
-Karizma ZMR:
Youngsters within

Reference: http://www.seminarprojects.com/Thread-hero-honda-customer-
satisfaction#ixzz1687BYVwz