Shares of Hero MotoCorp (HMCL) gained 5 percent at Rs 2,703.50 on BSE in Monday’s intraday trade after the world's largest manufacturer of motorcycles and scooters announced a new Rs 420 crore investment in Ather Energy.
Ather, an existing associate of HMCL, is engaged in the business of designing, manufacturing, producing, selling, servicing, software development and program management of electric vehicles and charging infrastructure; and storage, distribution and management systems, or all forms of electrical energy (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 percent (on a fully diluted basis). After the investment, the contribution will increase and the exact contribution will be determined once Ather completes the capital raising round, HMCL said in a 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 such as Ather Energy and Gogoro Inc, HMCL also builds the entire electric vehicle ecosystem, from products to technology, sales, service, customer service, operations and innovation," the company said.
HMCL shares underperformed the market last year with a 16 percent drop, compared with a 25 percent rise in S&P BSE Sensex. Over the past three months, the stock has fallen 8 percent, against a marginal drop of 0.04 percent in the benchmark.
"HMCL will increase its focus on EVs through its products (first launch on March 22), joint development with Gogoro (Taiwan) for a swappable battery model (launched in CY22), and investments in Ather Energy. It plans to launch more products every year.” The company is setting up a manufacturing facility for E-2W and batteries at its plant in Andhra Pradesh In the next five to seven years, analysts at Emkay Global Financial Services said in a September quarter results update that seven years, HMCL plans to invest Rs100bn (50 percent for electric vehicles).
The brokerage firm retains "buy" rating on the stock with a price target of Rs 3,700. “Stock catalysts include a rebound in 2-watt demand rebound and incremental announcements on the electric vehicle business,” it said.