- The shares of India's largest two-wheeler has lost a fifth of its value in the last five months.
- At the same time, peers like Bajaj Auto (up 5%) and TVS Motor (up about 3%) have gained value.
- While all three players are facing a demand slowdown in India, stronger focus on exports have helped Bajaj and TVS offset the losses here.
Hero MotoCorp recently launched the new BS-VI version of its best-selling two-wheeler model, the Splendor Plus. However, the upgraded versions were priced up to ₹10,000 more than the BS-IV versions. Therein lies the problem.
This price hike barely covers the rise in cost— up to 15% as estimated by B&K Securities last year—of making BS-VI models. There is pressure on
Hero Moto to retain its pole position in India and therefore keep the profit margin competitive.
The company is too reliant on India's middle class feeling good about their prospects to make money. Its portfolio is heavily skewed towards commuter models and there is barely any contribution from exports.
That has knocked the share price of Hero Moto down to near a six-year low.
]]>The shares of India's largest two-wheeler has lost a fifth of its value in the last five months. At the same time, peers like Bajaj Auto (up 5%) and TVS Motor (up about 3%) have gained value. While all three players are facing a demand slowdown in India, stronger focus on exports have helped Bajaj and TVS offset the losses here.
| Stock | Since Sep 20, 2019 |
| Hero Moto | -22% |
| Bajaj Auto | +5% |
| TVS Motor | +3% |
Hero Moto has 36% market share in India. However, it is no good being a market leader where the market is shrinking.
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The $3.2 billion net worth family led by Pawan Munjal has been leading a losing battle in a sluggish economy. Two-wheeler sales of Hero Moto have been on a downtrend for seven quarters in a row. That has taken a toll on the family’s wealth, which is down a little less than 10% in the last 10 months.
