Group 13 Final Hero Honda

8/8/2019 Group 13 Final Hero Honda

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.Hero Honda Motors Ltd

& ,Passion Potential…but fully priced in

Current market price.1682 10

( / / )As on 23 09 09



Zalak

Suraj

Mansi

Rohit

Feni lDhaval

The Analyst’s



WINNER



, %Hero Honda 57

, %BAJAJ 23

, %Tvs 16

, . %Yamaha 0 03

, . %Others 3 97



HERO HONDAIs a joint venture between the Hero

Group of India and Honda of Japanestablished in 1984 .

• Number 1 two wheeler company in theworld by volumes.

•Excellent manpower, proven

management, extensive dealer network,efficient supply chain and world-classproducts



Business model

http://upload.wikimedia.org/wikipedia/en/1/10/Business_model_components.png



1) 71% of cost is R.M

2) 4% employee cost

3) 5% advertising4) 3% royalty

5) 7% other expenses

1) R&D

2) Innovation

3) Experience

1) Strong distribution channel

2) Capturing Rural India

3) Backward and forward integration

4) Good Brand Name

5)Focused

Techno logy+Distribution =No. 1 company in the world1) Dual use mot orcycles that are low powered but very fuel efficient

2) Quality & Long lasting bikes

3) Manufactures low maintenance product

1) Hero honda has variety of bikes targeted to different buyers2) 32000 to 92000

ort Program, claims to be one of the largest programs of its kind in the world with over 3 milli

of production cost is due to material components.

2)Just In Time (save Rs. 343 per vehicle)

3) 5,000 outlets

Revenue from1) Sale of Motor bike

2) Service station3) Spare parts



Sources of Fund

Shareholding Pattern as on31 st ,March 2009



Application of Funds



Year 2005 2006 2007 2008 2009

Current Ratio 0.35 0.49 0.57 0.48 0.46



Income Statement



Year 2005 2006 2007 2008 2009

Dividend Payout Ratio 56% 47% 46% 46% 36%



C o st o f G o o d s Pro d u ce d Hero Honda Bajaj Auto TVS Motors

31-Mar-09 31-Mar-08 31-Mar-09 31-Mar-08 31-Mar-09 31-Mar-08

Units Sold 3,722,000 3,337,142 1,907,8532,139,779 904,225 869,105

Avg. Price of unitssold

34,175 34,022 40,15436,902 28,362 26,691

Avg. Cost of goodsProduced per units

26,959 28,225 34,67427,162 28,512 27,559

Excess per units 7,2155,797

5,4809,740 (150)

(868)

Excess % of sales21 17 14 26 (1)

(3)

Economic Value Added



Economic Value Added2005 2006 2007 2008 2009

Avg. Capital Employed 1,504 1,945 2,415 2,877 3,499Avg. Debt/Avg. Capital (%) 1.80 1.30 1.10 1.10 0.60Avg. Equity/Avg. Capital (%) 98.20 98.70 98.90 98.90 99.40Cost of Equity

Beta 1.01 0.98 0.75 0.59 0.59Cost of Risk Free Debt (%) 5.00 5.01 5.27 5.44 4.55Market Premium (%) 15.00 15.00 15.00 15.00 15.00Cost of Equity (%) 20.15 19.71 16.52 14.29 13.40Economic Value Added

et Operating Profit After Tax 812 973 859 969 1,283Weighted Avg. Cost of Capital (%) 19.88 19.52 16.40 14.19 13.35Cost of Capital Servicing 299 380 396 408 467EVA 513 593 463 561 816EVA/Capital Employed (%) 34.11 30.51 19.17 19.49 23.32

t f C it l



ost of Capital ividend Growth Model

D1 .74 49

P0 , .1 682 10

(%)ost of Equity .0 46

APM Model

Beta .0 59

(%)Cost of Risk Free Debt .4 55

(%)Market Premium .15 00

(%)ost of Equity .3 40

.vg Cost of Equi ty .6 93

ost of Debt .55

Debt 21 .4 55 96

Equity ,3 478 .16 93 ,58 887

,499 ,8 983

.vg Cost of Capi tal .6 86



Fenilampat sir



Zala

k

Mansi

FenilSuraj

Rohit

Dhaval

ampat sir



hank you Sir for r iding us through i na nc ia l m an ag em en t

rom Emba Finance

Group 13 Final Hero Honda

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