Change Is Constant

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ACF 100: Business Environment
Coursework Assignment 3:
“Share Price Group Project”

Introduction
Hero Honda is a two wheeler producing company which is based in India. The company had started back in 1984. As the name suggests, it is a joint venture between India’s hero groups and Japanese Honda Motors Corporation. It is the largest two wheeler producer in the country. In Indian market, the two main competitors of Hero Honda are Bajaj Motors and TVS Motors. Hero Honda has been the major manufacture of two wheelers since a long time as seen in the market, with a market share of 60% in motorcycles and 43% in two-wheelers; it has made a great impression on the mind of the customers. Company Analysis

As shown below almost till 2008, the company’s share prices weren’t very high, they maintained a lower base. But from October 22 share prices have started rising (as shown by the black line) because the company had reported about their leadership performance with 50 % net profit in quarter 2, '08-09 on the day before. This share price increase continued in the year 2009 also, and from there on, in 2010 they have been increasing at steady rate.

(Adapted from moneycontrol.com, 2011)
However with the passage of years, the company has seen ups and downs and recently the company is in news because of the joint venture termination between hero group and Honda Motors Company. This news was announced on 16 December 2010 and on the same day the share prices went up rapidly as shown below by the black line in the middle. Such a rapid increase in the share prices was not seen before the announcement or on the other days. The estimated reason of the break up which leads to the increase of the share prices can be because of their technology pact which will be loyal to them till 2014. People would still like to buy shares as they the name Hero Honda is linked with trust and quality; this could be another reason of the share prices going up after the split up. There is also news now that the hero group is now going to buy 26% stake from Honda in joint venture Hero Honda; keeping in mind that the name Hero Honda will be followed till the pact is ended. A more detailed comparison of the share price is shown in the competitor analysis which gives us an overview of the 6 months.

(Adapted from moneycontrol.com, 2011)

Competitor/Sector Analysis
Hero Honda promises to provide motorcycles that are low powered but very fuel-efficient. Its 2 plants in Dharuhera and Gurgaon in Haryana are capable of producing about 3.9 million bikes per year. In this sector companies other than Hero Honda that exist are Bajaj Auto, TVS Motor, Mah Scooters, LML and Kinetic Motor. Out of these companies Bajaj Auto and TVS Motor are the closest competitors, which is further proved. Bajaj Auto is the world's fourth largest two and three-wheeler manufacturer and the Bajaj brand is also known across several countries in Latin America, Africa, Middle East, South and South East Asia. Over the last decade, the company successfully changed its image from a scooter producer to a two-wheeler manufacturer. TVS Motor Company is the third largest manufacturer in the same industry in India and one among the top ten in the world, with annual turnover of more than USD 1 billion in 2008-2009, and is the flagship company of the USD 4 billion TVS Group. Its Scooty Pep has gained an image in the youth’s mind especially in the female sector. The company has 4 plants - located at Hosur and Mysore in South India, in Himachal Pradesh, North India and one at Indonesia. The company has a production capacity of 2.5 million units a year. Hero Honda, Bajaj Autos Ltd, and TVS Motor Company have been competitors in the two-wheeler sector of the Indian economy. With Hero Honda leading the market with the highest market capital, sales turnover and net profit.

(Adapted from moneycontrol.com, 2011)

The above table shows the Market Capitalization, Sales...
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