CRISIL reaffirms 'stable' rating on Hero Honda

Crisil, in a statement today, has reaffirmed its rating of 'AAA/FAAA/Stable/P1+' on Hero Honda's debt programmes terming it as 'stable'.

The rating agency said that it believes that Hero Honda will retain its robust business risk profile and financial risk profile over the medium term. Crisil, however, said that the rating could be downgraded to 'negative' if the two-wheelers company market share declines or if there is a sharp decline in its profitability.

Crisil said that the current rating has taken into account the yesterday's announcement of Hero Group acquiring Honda's 26 per cent stake in the company which will take the former's stake to 52 per cent.

Crisil said, "In Crisil's opinion, Hero Honda has a capable and experienced management team, with a proven track record in its core business , and in managing its daily operations. Crisil, therefore, believes that the proposed exit of HMC from the JV will not materially impact the business risk profile of hero Honda over the medium term; the company is expected to maintain its leadership in the domestic motorcycle market over the medium term, supported by its strong brands, robust distribution reach, and focus on the rural market."