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Hero MotoCorp stock falls nearly 3% as record COVID-19 cases hit manufacturing operations

India's largest two-wheeler manufacturer announced its plan to halt manufacturing operations temporarily at its manufacturing facilities across the country, including its Global Parts

twitter-logoBusinessToday.In | April 22, 2021 | Updated 20:01 IST
Hero MotoCorp stock falls nearly 3% as record COVID-19 cases hit manufacturing operations
Hero MotoCorp share slipped up to 2.63% intra day to Rs 2,750 against previous close of Rs 2,823 on BSE

Share of Hero MotoCorp declined over 2 per cent in early trade on Thursday after India's largest two-wheeler manufacturer announced its plan to halt manufacturing operations temporarily at its manufacturing facilities across the country, including its Global Parts

Center (GPC).

Hero MotoCorp share slipped up to 2.63% intra day to Rs 2,750 against previous close of Rs 2,823 on BSE.

Later the stock pared losses to close marginally higher at Rs 2,848, a gain of 0.85%.

The decision was taken considering the ongoing escalation in the spread of Covid-19 across the country. Each plant and GPC will remain shut for four days in a staggered manner between April 22 and May 1.

"The Company will utilise these shut-down days to carry out necessary maintenance work in the manufacturing plants. The shutdown will not impact the company's ability to meet the demand, which has been impacted due to localized shut-downs in many states and production

loss will be compensated during the remainder of the quarter. All plants will resume normal operations post this short shutdown period," the company said.

"All corporate offices of the company are in Work from Home (WFH) mode and very limited colleagues are in offices on a rotation basis for the continuity of essential services," the company added.

In another development, the company announced a strategic partnership with Taiwan's Gogoro to accelerate the shift to sustainable electric mobility in India. The companies will establish a battery swapping joint venture to bring Gogoro's industry battery swapping platform to India and will collaborate on electric vehicle development to bring Herobranded, powered by Gogoro Network vehicles to market.

"This partnership will further extend the work, which we are doing at our R&D hubs at the Centre of Innovation and Technology (CIT) in Jaipur & our Tech Centre in Germany. The vision and commitment of Hero and Gogoro is aligned towards the common goal of accelerating the shift to Smart, Sustainable electric mobility in India, and around the World," said Dr. Pawan Munjal, Chairman, and CEO, Hero MotoCorp.

"With this new partnership, we commit to introducing a sustainable mobility paradigm, first in India and then in other markets around the world. This partnership will strengthen and expedite the Indian government's electrification drive and will have a significant impact on India's energy and mobility future," he added.

"While FY22 volume growth will look strong optically, it comes on the back of a 29 percent cumulative decline over FY19-21. We do not expect two-wheelers to reach their FY19 peak even by FY23(unlike passenger vehicles)," CLSA said in a note.

"We forecast Q4 FY21 Ebitda margins to decline by 70-220 basis points quarter-on-quarter across our two-wheeler coverage. We expect FY22 margins to be slightly lower than Q4 FY21," it added.

Her MotoCorp has eight manufacturing facilities, including six in India, and one each in Colombia and Bangladesh. The company sold 576,957 units of motorcycles and scooters in March 2021, registering a growth of 72 per cent over the corresponding month in the

previous year.

India reported nearly 3.16 lakh fresh cases and a record 2,104 deaths in the past 24 hours. This is the first time the country has crossed the three-lakh mark in new infections.

Also Read: Pharma stocks scale fresh highs amid record rise in Covid-19 cases

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