August 9, 2016

Raamdeo Agrawal’s famous investment in Hero Honda

Raamdeo Agrawal’s bet on Hero MotoCorp (then Hero Honda) is market legend. In 1995, he invested around Rs 10 lakh in the shares of the two-wheeler manufacturer at Rs 30 apiece, and held on to them for the next 20 years, till the share price rose to Rs 2,600 apiece. When he sold out in 2015, his holding in Hero MotoCorp was earning him Rs 3-4 crore annually in dividend income alone. What makes this all the more noteworthy is that the rise was peppered with many dull periods.

Between March 2000 and March 2003, for instance, the stock did not budge from around Rs 225 levels. It was the dotcom boom era and non-IT stocks were undervalued. Agrawal stayed invested because of his faith in the Munjals, the promoters of Hero MotoCorp.

Again, in March 2011, many investors saw little value in the Hero stock after it parted ways with Honda Motor Company, ending a 20-year joint venture with the Japanese company. Agrawal was the contrarian. He knew Hero MotoCorp would lose its market share a tad, but he was sure the company would remain the leader in the two-wheeler segment. His confidence was validated: Between 2011 and 2015, the stock moved up by 13 percent annually. Though he has sold Hero MotoCorp from his personal portfolio, it is still a part of Motilal Oswal’s PMS schemes.


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