Hero Honda tanks 7% on royalty payment hike

Scrip of two-wheeler major Hero Honda plummeted over 7 per cent on the Bombay Stock Exchange on Thursday, on reports that the company will increase royalty payments to its Japanese partner Honda.

Amid the buzz, Hero Honda settled the day at Rs 1,788.25, lower by 7.27 per cent. During the day, the stock had tumbled 7.83 per cent to hit an over two month low of Rs 1,777.35.

It was the worst performer among the blue-chip stocks.

"Hero Honda tanked on reports of the company increasing its royalty payments to the Japanese partner Honda," Geojit BNP Paribas Financial Services Research Head Alex Mathews said.

According to media reports, Hero Honda has agreed to royalty payments of 8 per cent of net sales compared with the present 3 per cent.

Hero Honda saw a similar downtrend on the National Stock Exchange where it closed at Rs 1,784.70, down 7.31 per cent.