Hero MotoCorp:

Investment Analysis
Understanding the Company's
Financial Health

By- Pawandeep Singh [FC23154]

About Hero MotoCorp

Hero MotoCorp is the world's largest manufacturer of

motorcycles and scooters, founded in 1984 as a joint
venture between Hero Cycles and Honda. After the
dissolution of the partnership in 2011, it became Hero
MotoCorp. The company focuses on producing affordable
and reliable two-wheelers, ranging from commuter bikes to
premium motorcycles. With state-of-the-art manufacturing
facilities across India and a strong global presence in over
40 countries, Hero MotoCorp remains a leader in the
industry. Committed to innovation, technology, and
sustainability, the company also actively participates in
corporate social responsibility initiatives.
Vision and mission
1 Vision
Be The Future Of Mobility
2 Mission
Create
Value for our customers
Collaborate
With co-workers and partners by
drawing energy and inspiration
Inspire
A whole new generation paving
the way to a greener, safer and
equitable future.
Financial Ratios

Profitability Ratios Liquidity Ratios Common Stock Ratios

Measure company's Assess company's A ssess the
company's ability to ability to meet short- p erfo rm ance and
to generate profits term obligations valuatio n o f a
co m p any's
co m m o n sto ck

Activity Ratios Leverage Ratios

Indicate how Measure the amount
efficiently a company of debt used to
utilizes its resources finance a company's
operations
Activity Ratios
1 Inventory Turnover 2 Accounts Receivable
Measures how quickly inventory is
Receivable Turnover
inventory is sold and replaced
Turnover
A ssesses ho w efficiently a
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 co m p any co llects p aym ents
= 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 fro m custo m ers
𝑁𝑒𝑡 𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒𝑠
=
2023- 16.53 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
2022- 14.22
2023- 14.01
2022- 13.69
3 Asset Turnover
Evaluates how effectively a company utilizes its assets to generate revenue

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
=
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑆

2023- 1.48
2022- 1.31
Profitability Ratios

Gross Profit Margin N et P ro fit M arg in Return on Assets

Indicates efficiency in Shows overall profitability Measures company's
production and pricing profitability after ability to generate profits
pricing expenses and taxes profits from its assets

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 Net Profit PAT

= = Total Revenue = Average Total Assets
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

2023- 13.65 2023- 11.74

2022- 13.53 2023- 8.18 2022- 10.30
2022- 8.55
Liquidity Ratios

Current Ratio Quick Ratio

Indicates company's ability to pay current Measures company's ability to meet short-term
current liabilities with current assets short-term obligations with liquid assets.

2023- 1.57 2023- 1.28

2022- 1.92 2022- 1.65
Common stock Ratios
2023 2022
𝑀𝑃𝑆
Price/Earnings Ratio Assesses company's = 𝐸𝑃𝑆 16.69 19.78
value as an investment

𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑/𝑆ℎ𝑎𝑟𝑒
Dividend Yield Indicates the dividend =
𝑆ℎ𝑎𝑟𝑒 𝑃𝑟𝑖𝑐𝑒 2.42 4.75
returns on investments
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Return on Equity Measures the =
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟,𝑠 𝐸𝑞𝑢𝑖𝑡𝑦
profitability of 16.87 14.62
company's shareholder
equity
indicates the percentage 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑/𝑠ℎ𝑎𝑟𝑒
Payout Ratio = 71.11 81.92
of earnings a company 𝐸𝑃𝑆
distributes to
shareholders in the form
of dividends
Leverage Ratios
Debt to Equity
It indicates the proportion of
a company's financing that
comes from debt compared
to equity.
Interest Coverage
It measures how many times a
company can cover its interest
expenses with its earnings
before interest and taxes (EBIT).

𝑃𝐵𝐼𝑇
𝐷𝑒𝑏𝑡 =
= 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
𝐸𝑞𝑢𝑖𝑡𝑦

2023- 0.02 2023- 44.46

2022- 0.02 2022- 75.33
 Verdict
•Overall, Hero MotoCorp demonstrates efficient management of
inventory and receivables, strong profitability margins, healthy
liquidity position, and a conservative capital structure.

•Considering the positive financial indicators and low financial risk

indicated by the leverage ratios, it could be advisable to hold or buy
Hero MotoCorp shares, especially for investors seeking stable
returns and relatively low risk.

•However, investors should conduct further research and consider

market conditions, industry trends, and the company's growth
prospects before making investment decisions.