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RATING

RECOMMENDATION

Strong Sell

Business Type

Traditional Business

Discover and get info on Hero FinCorp Share Price before buying, selling and investing - Read our Research report on Hero FinCorp IPO For Information like - Management, Business Model, Financials, Growth, Valuations, Funding Rounds, News.

ISIN

INE957N01016

Face Value

₹10.00

Total Share

12,73,06,674

Total Income

₹1,205.47 Cr

Profit After Tax

₹51.62 Cr

EPS

₹4.23

P/E

212.77

P/B

2.44

Market Capitalisation

₹11,457.60 Cr

Enterprise Value

₹34,485.80 Cr

Book Value

₹369.03

Intrinsic Value

₹298.01

Dividend Yield

0.11 %

Earnings Yield

0.47 %

Sector

Financials

Sub-sector

Consumer Finance

Category

Small Cap

Cashflow - Operations

-₹1,840.00 Cr

Cashflow - Financing

₹2,356.70 Cr

Hero FinCorp Growth

Compounded Sales Growth

  • -23.52%

    1 Year

  • 20.91%

    5 Year

  • 48.36%

    9 Year

Pro Only

Compounded Profit Growth

  • -81.43%

    1 Year

  • -8.73%

    5 Year

  • 15.54%

    9 Year

Pro Only

Return On Equity

  • 1.09%

    2021

  • 8.76%

    2017

  • 12.67%

    2013

Pro Only

About Hero FinCorp

  • Hero FinCorp (an associate company of Hero MotoCorp), is an Indian Non-Banking Financial Company (NBFC),disbursing a loan every 30 seconds. The company is currently engaged in consumer finance businesses and commercial lending. The company offers retail loans, such as two-wheeler, personal, used car, and loyalty loans; and corporate loans, including SME and commercial loans, loans against properties, unsecured business loans, medical equipment financing, working capital loans, inventory funding, and doctor’s loans, as well as emergency credit lines and loans to small, medium, and corporates, etc.
  • It also provides finance, leasing, bill discounting, and related financial services. 
  • Hero FinCorp, is present at over 2000 retail touch-points across India, and has partnered with over 2000 satisfied corporate clients. Going forward, company is planning to continue expanding offerings and geographic presence, whilst offering class leading financial services to all sections of the society.
  • By April 2013, the company began giving two-wheelers loans to customers. In 2014, it ventured into loans against property, loans for small and medium enterprises and commercial loans.
  • The company was launched in Dec,91 as Hero Honda Finlease Ltd by extending working capital loans and medium-term finance to component suppliers and dealers of parent firm Hero MotoCorp and has registered office in New Delhi.
  • In 2011, as Hero Honda Motors was restructured, the company was renamed Hero FinCorp and acquired its present form.

  • Hero FinCorp IPO Details

As of 2021 there is no information regarding company's IPO

  • Hero FinCorp Funding

Funded By Funding Amount Date of Investment Fund Name
Chrys Capital ₹ 291 Cr 24 May 2020 Growth
Chrys Capial ₹ 570 Cr 15 Sep 2016 Private equity round
Credit Suisse ₹ 132 Cr 14 Sep 2016 Private Equity Round
Hero Group ₹ 300 Cr 14 Sep 2016 Private Equity Round
  • Hero FinCorp Subsidiaries

Hero Fincorp has one wholly-owned subsidiary company:

Hero Housing Finance Limited (“HHFL”). It is an all-inclusive housing finance company providing hassle-free home loans PAN India which includes the following products to its customers: (i) Home Loans, (ii) Loan Against Property, etc.

Hero FinCorp Business Model

The company is engaged in the business of finance and investments as a NBFC without accepting public deposits for which the certificate of registration has been obtained from the Department of Non- Banking Supervision, RBI.

The company is currently engaged in consumer finance, businesses and commercial lending. Consumer finance includes financing Hero MotoCorp two wheeler, loyalty customer loans and providing loans against property. On the commercial lending side it provides Indian corporates with a wide portfolio of financing products which include working capital loans, machine loans among others. It is a captive finance company of Hero MotoCorp Ltd.

  • Hero FinCorp Revenue Segmentation

  • Interest Income
  • Dividend income
  • Lease rental income
  • Other financial charges
  • Other Income
  • Hero FinCorp Product & Services

  • Two Wheeler Loans
  • Loyalty Customer Personal Loans
  • Used Car Finance
  • Loan Against Property
  • SME & Commercial Loans
  • SimplyCash - Instant Loan App
  • Hero FinCorp Assets

Assets owned by HeroFincorp as of 31st March'21:


Company owns Building of worth Rs.3.58 Cr.

Company owns Plant and equipment of Rs.0.66 Cr.

Company possess Furniture and fixtures of worth 2.7 Cr.

Company owns Vehicles of Rs.19.68 Cr.

Company owns Data processing equipment of Rs.16.96 Cr.

Company possess Office equipment of worth Rs.2.36 Cr.


Assets given by company on Operating lease:

Vehicles  worth Rs.7.11 Cr.

  • Hero FinCorp Industry Overview

Industry Statistics

  • Non-Banking Financial Company(NBFC) sector plays an important role in financial inclusion by meeting credit needs of retail and MSME sector by providing consumer credit, including automobile finance etc. It provides efficient credit distribution reach to untapped and under-penetrated regions and customer class.
  • Between FY17-FY20, the NBFC sector has shown upward growth in terms of asset size from approx Rs.22 lakh crore in FY17 to Rs.35 lakh crore with year-on-year(Y-o-Y) growth of 11% in FY20 its largest asset size in four years. In absolute terms, the asset size of the NBFC sector, as of March 31, 2020, is Rs.51.47 lakh crore. The major reason for this growth is increasing in demand of updated vehicals and per capita income. 
  • The credit delivery of NBFC sector constituted 11.6 % of GDP in FY20. Credit growth of the NBFC sector was close to 3 % in June 2020. Further, the credit growth contracted in September 2020 with a Y-o-Y growth of -6.6 %.
  • The biggest challenge for the industry is the rise in non-performing assets (NPAs) that impacts the overall asset quality. Asset quality of NBFCs has improved moderately with GNPA ratio at 6.4% at the end of March 2021 as against 6.8% at end of March 2020. The Net NPA ratio decreased in FY2021 and was 2.7% compared to 3.4% for FY2020 and 3.3% in FY2019. 
  • NBFCs take enormous exposure to vehicle financing. Around 85% of the total vehicle financing exposure of NBFCs is from commercial vehicles (CVs) and passenger car/utility Vehicles (UVs) financing. NBFCs Credit deployed to Auto Loans was 8.73% of the NBFCs Non-food credit deployed in FY19 which improved to 10.13% in FY20 as a result of ease of availability of finance and reduction in lending rates.
  • In FY21 loan growth in the financial industry was weaker due to Covid19 and the lockdown the followed resulting in enhanced competition in the vehicle industry. 
  • Major players in auto financing market is M&M financial services and Poonawala Fincorp , where Hero Fincorp carry a a small % of market, that too in unsecured lending which is highly risky.

Future Prospects

  • The Indian auto industry is expected to record strong growth in 2021-22, post recovering from the effects of the Covid-19 pandemic. India is expected to be the world’s third-largest automotive market in terms of volume by 2026. 
  • India Ratings and Research (Ind-Ra) has changed the outlook for retail non-banking financial companies (NBFCs) and housing finance companies (HFCs) to ‘improving’ from ‘stable’ for the second half of 2021-22. NBFCs with a diversified asset mix and non-overlapping customer segments could be considered better placed, according to the agency. It expects NBFCs to maintain growth in the range of 9-10% and HFCs at 10 per cent in the current financial year.
  • The Commercial Vehicle industry is likely to rebound and show recovery after witnessing two consecutive years of double-digit de-growth. Demand for Commercial Vehicles, is also likely to benefit from various government initiatives to help revive the economy. Domestic Passenger Vehicles are expected to have nominal growth in coming months of FY22 as it is highly impacted by the ongoing semi-conductors shortage, a critical component used in PV manufacturing. 
  • The Indian age demography has two-thirds of our population below 35 years of age, Share of population in the age group 0-14 is 26.16%. Share of working age population (15-65 years) is 67.27%, which indicates a very positive future outlook for Indian Auto financing Industry. As this generation is bending towards new updated versions of vehicles, are ready to spend a lot on the easy o using them.
  • As updated vehicles with greener fuels are coming up, this may induce the demand in auto sector and is supposed to bring demand for auto financing industry too.

Government Initiatives

  • The government and the RBI rolled out a host of measures In FY20 in order to restrict the impact of the pandemic, provide relief and help the economy regain its footing.
  • The RBI, in March 2020, offered relief to borrowers by announcing a moratorium on EMIs of all term loans for a period of six months ending 31 August 2020. The moratorium was available on all loans including home loans, personal loans, and credit card dues, among others. The RBI also stated that using the moratorium option may not result in any impact on the credit scores of borrowers or cause any credit downgrade.
  • The RBI opened a window up 30 September 2021 under the Resolution Framework 2.0 allowing lending individuals to implement resolution plans related to their exposures to individuals and small businesses including MSMEs with aggregate exposure up to Rs.50 crore while classifying the same as 'Standard'. The objective of this move was to alleviate the potential stress to individual borrowers and small businesses due to the pandemic.
  • The Government extended the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) on 31 March 2021 by introducing the ECLGS 3.0 to meet the credit needs of companies belonging to the hospitality, travel, tourism, leisure and sporting industries. Following this, the Government announced the ECLGS 4.0 to cover the credit needs of hospitals to set up oxygen generation plants.
  • RBI lends to banks in four tranches of Rs 25,000 Cr each. In total Rs 1 lakh Cr in TLTRO. The first tranche was available on March 27, 2020, and the last tranche of Rs 25,000 Cr was up for bidding on April 17, 2020. Once the banks bid for an amount, they will get it at the repo rate (currently 4.4%, but the interest rate will change for subsequent periods as the repo changes) for a tenure of three years. 
  • To address the issue of asset liability mismatch of NBFCs, the Reserve Bank introduced the liquidity coverage ratio (LCR) requirement for all deposit-taking NBFCs and non-deposit taking NBFCs with an asset size of 5,000 crore and above.

Hero FinCorp Awards & Achievements

• Hero FinCorp Limited was certified as a Great Place to Work for the fourth time in a row.

• Hero FinCorp is amongst Top 30 Best Workplaces in BFSI 2020 for the third year in a row.

Hero FinCorp Strengths

  • Hero Fincorp has a strong brand name and is backed by Hero motors. It receives operational, financial, and managerial support from Hero MotoCorp Ltd(HMCL), its largest shareholder.
  • It has PAN India presence of network.
  • The company has a well-defined and scalable organizational structure based on product, territory and process knowledge.
  • Experienced and stable senior management team, who has strong relationships with public, private as well as foreign banks, institutions and investors.
  • The company has 6 million plus happy customers.
  • The company's digital vertical has improved the process for instant Personal Loan product – ‘SimplyCash’ which has led to 7.2 lakh app installation with 13K loan disbursals accounting to Rs.134 Cr.

Hero FinCorp Shortcomings

  • Hero Fincorp's business and growth is directly linked with the GDP growth of the country and as till now country is affected by covid the impact is ongoing on company as well.
  • As during April, Non-bank lenders and housing finance companies catering to the self-employed were looking at fresh slippages, with initial estimates suggesting a rise in the portfolio at risk, a fall in loan pool sales and tepid loan collections. Cheque-bounce rates picked up, pointing to stress in the unsecured segment. The risk is still prevailing in the market, which may affect the company as well.
  • Hero MotoCorp Ltd.(HMCL) and its associates accounted for nearly 52% of total business sourced within the HMCL ecosystem. Which is not a good sign for company's individual growth. Though the company may remain significantly dependent on HMCL and its associates, an improvement in scale of operations and foray into new businesses should help the company diversify its revenue profile.
  • CRISIL's analysis of Hero Fincorp's asset liability maturity profile as of March 2020 shows cumulative positive mismatch (cumulative inflows over cumulative outflows) in the up to 1 year buckets.
  • As per CRISIL, HFCL continues to tap debt capital market for fresh issuances and raised funding via bank borrowings, which can make the company more risky for investors.
  • Hero Fincorp mainly deals in unsecured loans which brings huge risk for the company. As the company is backed by Hero MotoCorp, major vehicle financing for customers is done by them. Due to this company had to face many defaults after covid pandemic as well. They are trying to move in secured market as well but currently a big portion of their loan book consist of unsecured loans.

Hero FinCorp Opportunities

  • The company deals in largely untapped market, both rural and urban and also geographically. There are still many locations in India itself where company can expand their services.
  • In coming years more and more customers are likely to go for technology upgradation, in terms of automatic or greener vehicles, this may create opportunity for the company to finance them.
  • The company can work on onboarding customers on technology platform and effectively use them for extending credit on their working capital needs and for also enhancing digital footprint on recovery.
  • In May 2020, RBI cut interest rates to its lowest in 20 years to 4% which has compelled banks to cut rates for FDs. Hence, RBI giving money to boost Banks and banks would lend to NBFC at much less rate this may result in higher NIMs for NBFCs.

Hero FinCorp Threats

  • Hero Fincorp is likely to get impacted by all risks associated with pandemic, as higher the risk, higher would be the default rate with lower consumers and corporates using financing services.
  • The company may also get impacted by inadequate availability of bank finance and upsurge in borrowing cost.
  • The company faces huge competition from captive finance companies, small finance banks.
  • Asset quality deterioration may wipe of entire profits as well as the net worth of the company.
  • Financial service firms are prime target of cybercrimes. Because of sensitive data entry they carry, they are more likely to be targets which can be a big threat for them.
  • In this industry customer retention rate is decreasing year on year. What matters to most customers is great personalization, more automated services and easier access to services. Now companies need to try harder to retain their customers.


Hero FinCorp Rating

  • RECOMMENDATION

    Strong Sell

  • Hero FinCorp Detail Info

Industry Statistics

PUBLIC LIMITED

Registered In

India

last Updated

17/12/2021

Registered Date

17/12/1991

Planify Ticker

HFC

Reg Office: 09, Basant Lok, Vasant Vihar, New Delhi - 110057

Website: https://www.herofincorp.com/

Frequently Ask Questions

The Hero FinCorp has not expressed any intentions of an initial public offering as of now.

The face value of the Hero FinCorp is Rs.10

Hero FinCorp is underperforming and is not able to generate enough profits due to the pandemic, but as per the previous growth and recent quarterly results of the company, it may see growth in its profitability

Major shareholders of the Hero FinCorp are Hero MotoCorp, Bahadur Chand Investment Private Ltd, Otter Limited and Brijmohan Lall Om Parkash.

Major shareholders of the Hero FinCorp are Hero MotoCorp, Bahadur Chand Investment Private Ltd, Otter Limited and Brijmohan Lall Om Parkash.

Dr. Pawan Munjal is the chairman of Hero FinCorp.

Hero Fincorp has a strong brand name and is backed by Hero motors. It has a PAN India presence. The Hero FinCorp has 6 million plus happy customers. The company’s digital vertical has improved the process for instant Personal Loan product –‘SimplyCash’ which has led to 7.2 lakh app installation with 13K loan disbursals accounting to Rs.134 Cr.

The minimum holding period after the company has been listed is 6 months. 

The total profit of Hero FinCorp is Rs.51.62 Cr.

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