So one could make money here even in the short term. Hero Honda was promoted by Munjals and is today commands a sizeable mindshare of the two wheeler buyer market. It manufactures its motor cycles and spare parts in plants located in Haryana, It has technical collaboration with Honda Motor Company Ltd, of Japan.

Hero Honda takes full advantage of its strong product menu, aided by the technological inputs from its collaborator. It has a well established dealer network of 338 numbers, and six stockists. Provision of service is well taken care of by 96 service points.

Within five years of its starting operations, it exported its two wheelers. Currently it caters to the overseas markets in Colombia, Peru, Uruguay, Argentina, Nigeria, South Africa and the middle east. It also serves the neighbouring markets in Sri Lanka and Bangladesh.

It enjoys a leadership position in India commanding a 50 per cent market share in motorcyles. Count the positive factors for the investor - A strong brand image, a well developed and effective network, excellent collaboration and thereby deriving good brand image. All add to a rather heady prescription.Ofcourse in recent times fears have surfaced over the possible manufacturing or marketing by its foreign collaborator its own two wheelers.

But the market has by now digested this. And with long experience, Hero Honda can well stand up to competition.For the quarter ended March 2000, Hero Honda has posted a growth of 57 per cent in sales to Rs 728.26 crore. Motorcycles sales grew by 48 per cent from 161466 units to 239542 units.

Other income grew by 59 per cent. Rise in raw material cost pushed down the operating profit margin from 14.5 per cent to 14 per cent interest charges were well contained, and the company could become debtfree soon. While depreciation went up by only 24 per cent, tax went up by 59 per cent. The ability to price its products aggressively made it possible for it to post a rise in net profit by 59 per cent to Rs 60.30 cr. The motorcycle segment commanding a 54 per cent share in the two wheeler market grew by 34 per cent. Comparatively the two-wheeler market increased by only 12 per cent.

Hero Honda launched in April this year, an upgraded version of its `Street' motorcycle named `Street Smart' with additional features. The motorcycle has with new exteriors including a front shield and storage box and was offered at the earlier price of Rs 32,000 (ex-showroom, Delhi) for the standard version and about Rs 36, 000 for the deluxe self-start version This new version of the `Street' is expected to push up the sales from the current level of 40,000 a year, which the earlier version was selling.With an earning per share of Rs.47 on a book value of Rs 112.3, for FY2000, one can look forward to a growth of atleast 30 per cent on earnings in FY2001.

Currently the scrip is lying dormant. You should look out for an opportunity to pick it up around Rs.800 in a market panic situation.

Invested even in the current level the scrip is likely to give a 20-25 per cent return over the next year. The downside risk is minimal. It will form a good addition to a well balanced portfolio.