Shares of Hero MotoCorp (HMCL) gained 5 per cent at Rs 2,703.50 on the BSE in Monday’s intraday trade after the world’s largest manufacturer of motorcycles and scooters, announced a new investment of up to Rs 420 crore in Ather Energy.
Ather, an existing Associate company of HMCL, is engaged in the business of designing, manufacturing, producing, selling, servicing, software development, and software management, in relation to electric automobiles and charging infrastructure; and storage, distribution, and management systems, or otherwise all forms of electric power (including energy in the form of batteries) and other ancillary services.
Prior to the proposed investment, Hero MotoCorp’s shareholding in Ather Energy was 34.8 per cent (on a fully diluted basis). Post the investment, the shareholding will increase and the exact shareholding will be determined upon completion of capital raise round by Ather, HMCL said in press release.
The two-wheeler maker said it is addressing the emerging mobility opportunity through organic and inorganic initiatives.
HMCL is gearing up to unveil its first electric vehicle (EV) in March this year. “Through its investments and partnerships with external partners like Ather Energy and Gogoro Inc, HMCL is also working towards building the entire EV ecosystem — from products to technology, to sales, service, customer care, operations, and innovation,” the company said.
The stock of HMCL has underperformed the market in past one year with a 16 per cent fall, when compared with a 25 per cent rally in the S&P BSE Sensex. In the past three months, the stock has shed 8 per cent, as against a marginal 0.04 per cent decline in the benchmark index.
“HMCL will increase its focus on EVs through its own products (first launch by Mar’22), a joint development with Gogoro (Taiwan) for a swappable battery model (launch in CY22) and investments in Ather Energy. It plans to launch more products every year. The company is setting up an E-2W and battery manufacturing facility at its Andhra Pradesh plant. In the next 5-7 years, HMCL plans to invest Rs100bn (50 per cent for EVs),” analysts at Emkay Global Financial Services said in September quarter result update.
The brokerage firm retains ‘Buy’ rating on the stock with target price of Rs 3,700. “Stock catalysts include a rebound in 2W demand and incremental announcements on the EV business,” it said.