Hero Honda, the most economical and fuel efficient bike maker, is on a roll as the company has managed to declare hefty dividends out of their profits. Over the last year or so there are talks of Hero and Honda separation but that did not pull back the profit making of the company and thus the company has managed to declare heavy dividends of Rs.70 per share.
As a matter of fact, this declaration of dividend has helped the company cruise on the stock market. The company’s stocks are already up by almost two percent (as on Monday) and the pace doesn’t seem to slow down. The company declared heavy interim dividend of INR 70 per share on a mere Rs.2 share, this comes to 3500% interim dividend. The company reported to BSE that they wish to declare a dividend of Rs.70 per share while all the other technicalities remained unknown.
This heavy dividend declaration by the company will certainly lead to the creation of a positive perception about the company despite the fact that Hero and Honda are on the verge of break up. As far as the company’s history in dividend declaration is concerned, Hero Honda last year declared a whooping silver jubilee dividend of about 4000% per share. Back in the year 2009, Hero Honda said that they are having a huge cash reserve of over 4000 crores and they are planning to use this fund in giving special dividend to its shareholders or expanding capacity.
During April-December, 2010, the company’s net profit fell by 12.66% to Rs 1,426.29 crore from Rs 1,633.02 crore in the same period previous year. In the last 9 months Hero Honda has excelled in profit making. The profits during the last 9 months were increased by 19.36% to Rs 14,010.22 crore from Rs 11,738.19 crore in the year-ago period. This certainly will give a lot of boost to the company in terms of both sales and shareholder satisfaction. With this act of declaring 3500% dividends, Hero Honda will certainly gain back all the goodwill and the customers.