Hero MotoCorp has surged 5% to Rs 1,959 extending its past two days 2.4% gain on reports that the company has proposed to invest Rs 2,575 crore to set up two new plants in Rajasthan and Gujarat and an integrated research and development (R&D) centre.
The expansion plans would boost its annual production capacity to nine million from the current seven million, according to the report.
Meanwhile, the board of directors of the company approved a proposal to merge the investment arm — Hero Investments Pvt Ltd (HIPL) — with the parent in a move that will give private equity funds Bain Capital and GIC 8.58% and 3.71% stakes respectively in Hero MotoCorp, India’s largest two-wheeler manufacturer said in a filing to the stock exchanges.
However, analyst at Anand Rathi equity research in its report said that,” While the capacity expansion and export plans are aggressive and positive, the benefits are likely to be seen only after 15-18 months. In the interim, volume pressure due to competition and the rupee depreciation would be cause for concern”.
The stock opened at Rs 1,884 and hit a high of Rs 1,969 on the National Stock Exchange. A combined around 485,000 shares have changed hands on the counter till noon deals on both the exchanges.