Hero Honda: Dividend Stock for Long Term Investment

hero_honda_logoHero Honda Motors Limited (HEROHONDA) is India’s largest 2 wheeler motorcycle manufacturer in India. It has two manufacturing facilities at Dharuhera and Gurgaon in Haryana, which produce over 3 million bikes per year. It is has largest market share in excess of 50% in Indian two wheeler segment.

One notable aspect that I personally like about HEROHONDA is its positioning in the market segment. It satisfies the vehicular needs of large number of middle class in India. It is very well positioned in a sense that recessionary trend, slow down, or increase in oil price improves its sales and revenue. This is evident by relatively stable stock during this current market turbulence since Year 2009.

Trend Analysis

The whole reason for any business to exist is to generate sales revenue and make more profits. At a minimum, the parameters listed below should have continuously increasing trends. All the data below is based on last 8 years i.e. from 2001 to 2008.

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Interesting Reader Questions

I receive questions in my email and once in a while I like to sample out few interesting ones. In last one month or so, I received two very interesting questions on which I presenting my thoughts below.

Why do you make your analysis very length and elaborate, although I like the completeness? Is it really required? Looking at EPS, P/E ratio and similar four or five parameters should be good enough to make a judgment decision.

Completeness cannot be obtained without being elaborate. Am I right? I do not now weather a length of analysis is required or not. In my view, length is not a barometer in my analysis process. I am looking for few things based on my objective, and I pursue it to understand it better. Many times I stop short knowing it is not going to be worthwhile to continue. I am looking for generating income using dividends and capital appreciation.

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Suggested Reading – August 3, 2009

Blogosphere is an interesting place where you find various bloggers expressing their viewpoints. I am listing some of the articles that I enjoyed reading.

My Article in Blogosphere

Economy, Finance, Investing.…..

These are some diverse set of articles from fellow bloggers and business magazines. I hope you enjoy reading all or some of these interesting posts.

Power Companies leading the Renewed IPO Buzz

ist1_916688-male-gossips-2Yes, the buzz is back and testing markets and testing mettle of individual investors. Three power sector companies, viz. Adani Power, Indianbulls Power, and NHPC, are in fray to get investors money. I had expressed my thoughts about Reliance Power IPO. Let us revisit some of the few tidbits in the context of this latest buzz.

Adani Power was priced in the range of Rs. 90 to Rs. 100 per share. It completed the subscription period and based on the NSE data; it was over subscribed by 20 times. My viewpoint is, its the herd mentality and craze continues. We individual investors never learn our lessons.

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Alternative Income Streams

ist1_7925369-flock-of-dollar-fly-awayAlmost all of us have full-time salaried jobs where we work hard. We offer our knowledge and/or time to work for any given company. In return, we get compensation and recognition, and many of us eke out an excellent career from it. This is an active form of generating income. When we look at any company, how many times have we asked what are different types of products or market segments it sells into? It is good to have a company that has multiple products for continued profitability. Similarly, wouldn’t it be nice to have multiple streams of income? A multiple streams of income will provide us a safety net against our jobs!

There is a very popular notion of “passive income” that floats around the blog-o-sphere. The essence of passive income is; it is the money earned with or without our involvement. Once it is setup, the recurring income will flow in continuously. In my vocabulary, there is no such thing as passive income. Just because we do not see the effort does not mean it is passive. Instead, I like the term “alternative stream of income”. I am always curious to understand how individuals can create alternative streams of income and how they execute it. Following are few alternatives that I have thought about and tinkered with in recent past.

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Stock Buying Process

One of the dilemmas long term investors may face is, when buying for first time, how much worth of stocks one should buy in a given company. This question is from long term perspective and not for trading approaches. There are few different schools of thought on this issue. In my view, each of the thoughts, methods, and approach is valid depending upon investor’s objective.


One thought says buy at once in one go, because if one has spent time following it, researching it, then why wait for other occasions. The fact that an investor has questions (or doubt), that means this individual has doubts, or not confident about it. One is questioning own analysis. It could be lack of proper understanding of the stock, or lack of research.

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How to Execute Asset Allocation – Yale Fund Example

01319109We all investors try and maintain a diversified asset allocation in our investments. In my discussions with many folks, I have seen that many use different ways of executing this diversification. Many use combination of real estate, equities, gold, etc. In case of equities, quite a few enterprising ones long term portfolio in combination with trading portfolio. Many of us, including me, are aware of different types of asset class and investment vehicles. Unfortunately, for most of us individual investors, we fail to understand how to execute effectively. We really do not know how to engineer our portfolio such that it has optimum asset allocation for our risk profile. We think we allocate little bit of capital to all assets and we should be good to go without any worries.

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