Hero Honda to give 3,500 per cent dividend
"In its board meeting held today, the company considered and declared an interim dividend at the rate of 3,500 per cent, that is Rs 70 per equity share of Rs 2 each," company said in a filing to the Bombay Stock Exchange (BSE). In its filing to the stock exchange, the company did not say how much it would cost the bike major. The company's spokesperson could not be reached for comment.
However, according to a senior official of the company the dividend payout will cost it about Rs 1,500 crore. "This payout will cost the company about Rs 1,500 crore. But this is just a rough estimate. The exact figure I can tell only after calculations," he said. "There is nothing surprising in this announcement as the company has performed well. We have enough cash surplus. Last year too, we shared a similar dividend with all the stockholders. So, I do not see it having any negative impact on revenues in the long run," the company official added.
In March last year, the company had declared a Silver Jubilee Special Dividend of 4,000 per cent or Rs 80 per equity share of Rs 2 face value each. The announcement was received well by the markets and the market experts. The Hero Honda stock rallied at the BSE closing 5.86 per cent higher at Rs 1,735.10.
Market analysts said that the dividend payout will have no negative impact on the company's revenue. Surjit Arora, auto analyst at leading brokerage firm Prabhudas Lilladher, said, "The company is cash rich. They have about Rs 6,000 crore cash reserve in their balance sheet. After calculation the whole payout will amount to Rs 1,400 crore. Even after the payout there will be enough reserves left with the company. So, I do not see any negative impact on the company."
His view was supported by Jatin Chawla, an analyst at Hero Honda to give 3,500% dividend India Infoline. "I see it as a very healthy trend to keep the investors happy. These days investors like companies which invest and share it (the gains) with them. So, I see the impact will be positive and it is apparent from the way the market has reacted today," Chawla said.
"The company has done well - exceeding market expectations. The two-wheeler sector in general is doing well. There is a lot of cash reserves with the company. So, I do not see why it will have any negative impact on revenues," Chawla added. Meanwhile, Hero Honda Motors appointed Toshiyuki Inuma as a non-executive additional director with effect from April 13.
The company also accepted the resignations of non-executive director Yuji Shiga and non-executive and independent director Shobhana Bhartia from its board with effect from April 13.
Hero Honda to give 3,500 per cent dividend
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