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The Hero MotoCorp stock has moved up by 8 per cent this week. Apart from the market preference for cyclicals, which has been driving up the prices of stocks in the auto and auto ancillary space, other developments have increased investor interest in the stock.
One is the announcement to invest in a Greenfield plant at Chittoor in Andhra Pradesh with a capacity of 1.8 million two-wheelers a year.
The company had signed an MoU with the Andhra Pradesh Government for the same, a few days ago. While this involves a capex of Rs 1,600 crore, the company being cash rich and light on debt, is expected to fund this expansion through internal accruals.
Besides, after a sales volume growth of only 10 per cent in the first four months of this fiscal, the volumes shot up by 21 per cent in August.
New launches
Despite fears of a bad monsoon playing a dampener on Hero's volumes, recent launches such as the new Karizma, ZMR Xtreme, Passion Pro TR and the new Pleasure scooter have helped boost sales.
With the festival season coming up, the momentum in sales is expected to continue. More so, because the company plans to launch 10 new vehicles including new models, upgrades and refreshes this year.
A new stock option plan has also been worked out for employees and the window for voting by shareholders on this proposal was open until September 18.
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