Hero Honda (HHL) has recorded a jump of 27% in motorcycle sales for the month of July. The jump in sales is supported by the fact that the company has launched four stroke motorcycles ahead of the competition.
Hero Honda Motors Ltd. (HHL) is India's largest manufacturer of 100-cc motorcycles (market share of 42%). The company is a joint venture between the Hero Group and Honda, Japan.
The surge in agricultural production has led to a rise in rural and semi urban incomes. This has in turn stimulated the demand for motorcycles in these areas. Another reason for the surge is the change in customer preferences in favour of motorcycles.
The company's initiatives in launching the four stroke variants ahead of the competition is the main reason why the company continues to post better than industry growth rates. The company has also launched up market models. This will help the company tap a wider customer base while at the same time earning it higher margins.
Hero Honda continues to strengthen its leadership position in the industry. Despite the increasing competition, the company has gained market share.
The stock has been rated as a 'BUY' mainly on account of strong brand name, wide distribution network, and alliance with Honda which give HHL a unique competitive advantage.
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