MOSL: HERO MOTOCORP | FY17 Annual Report-Focusing on new products for market share gain-Spells out micro market strategy
​HERO MOTOCORP | FY17 Annual Report: Focusing on new products for market share gain; Spells out micro market strategy for ramping up exports
(HMCL IN, Mkt Cap USD11.5b, CMP INR3697, TP INR3690, 0.2% Downside, Neutral)
HMCL’s FY17 annual report highlights the company’s efforts to maintain market leadership in the domestic market – new product launches, customer engagement, and electric vehicle (EV) strategy. Also, it spells out the company’s strategy for global markets. Key highlights from the annual report:
Domestic volumes impacted by regulations: In FY17, the 2W industry was impacted by regulatory measures such as (1) demonetization, (2) shift from BS-3 to BS-4, and (3) GST. HMCL’s volumes grew only by a marginal 0.9% in FY17 (domestic 2W industry grew 6.8%). HMCL’s volumes grew 12.3% in 1HFY17 but declined 10.2% in 2HFY17, impacted by demonetization.
Key trends witnessed in export markets: (1) South Asian market was resilient, led by double-digit growth in Nepal and Bangladesh. Consumer preference and regulatory mandate continue to shift the market towards scooters. (2) Africa: Markets continued to be impacted by decline in crude oil prices and currency devaluation. East and Central African markets have been relatively stable. (3) Middle East: Turkey has moved to Euro-4 and Iran has moved to fuel-injected bikes for imports. (4) Latin America: Colombia market declined 12% while other Latin American markets were flat or witnessed marginal growth. Except Colombia, major Latin American markets continued to shift towards 125-150CC bikes.
New product launch pipeline strong: HMCL is targeting six launches in FY18, including one launch each in the fast growing scooter (125cc scooter in 3QFY18) and premium motorcycle (200cc motorcycle in 4QFY18) segments. Despite the lunch of Maestro Edge and Duet scooters in FY17, HMCL’s market share in scooters remained at 14.1% in FY17 against 16.3% in FY16. Its efforts to win back market share are yet to deliver due to competitive pressures.
Hero MotoCorp is engaged in the production and sale of motorized two wheelers up to 350cc engine capacity for both domestic and international markets.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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