Hero Honda scrip tanks further 5%

Shares of Hero Honda continued to tumble on Wednesday amid reports that the group is set to buy 26 per cent stake of its Japanese partner Honda Motors in a $1 billion deal. The scrip tanked 5.40 per cent to Rs 1,621.30 on BSE, taking its month-to-date decline to nearly 18 per cent.

On NSE, the scrip dropped 5.18 to Rs 1,621.55 after generating unusually high volumes. About 30.78 lakh share exchanged hands on both the exchanges.

“There were no official announcements or clarity by Hero Honda regarding this split. Investors were worried over the price, which Hero group will pay to Honda. Also, investors were clueless what will happen when the technology support from Honda expire,” said Pankaj Pandey, head of research at ICICI Securities.

“Royalty issue may lead to further decline in the Hero Honda stock. Hero group will have to pay more royalty between 2-6 per cent to Honda group to continue Japanese company’s technology,” said Ajay Parmar, head of institutional equities at Emkay Global Financial Services