International BusinessHero Honda: All in the Hero Honda: All in the Shobhana Subramanian / Mumbai September 9, 2009, 0:42 IST
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Also, while Hero Honda currently commands a market share of 59 per cent for motorcycles and has a firm grip on the 100cc entry segment, Bajaj Auto, which recently re-entered the space, has done well to sell 48,000 vehicles in the very first month.
Nevertheless, Hero Honda plans to go ahead with launches of upgrades of some of its models in the next six months and with the economy on the mend, volumes in the current year should go up by about 10-12 per cent; they were up 12 per cent on a smaller base last year.
Given its pricing power, revenues, analysts estimate, could increase by at least 17-18 per cent over the Rs 12,319 crore posted last year. In the June 2009 quarter, revenues increased 34 per cent year-on-year to Rs 3,811 crore. Lower raw material costs should help operating profit margins sustain at levels of 16.5 per cent. At the current price of Rs 1,668, the stock trades at 18 times estimated 2009-10 earnings which is not cheap.