Why did Hero MotoCorp shares hit a crater and how serious is the injury?


by 5paisa Research Team Last Updated: Dec 15, 2022 - 08:46 am 32.8k Views
Listen icon

Shares of Hero MotoCorp, India’s largest two-wheeler manufacturer by unit volume sales, crashed almost 7% in Tuesday’s trading session following reports of alleged bogus expenses and tax evasion amid a probe by the Income Tax department.

The tax department raided Hero MotoCorp premises at multiple locations between March 23 and March 26 including the residence of its chairman and CEO Pawan Munjal. It is also analysing a Rs 100 crore deal involving a farmhouse located on the outskirts of Delhi.

What exactly is the matter?

As many as 25 premises were searched as part of “search and seizure action” on suspicion of tax evasion.

What is the tax department looking for?

Tax officials are analysing around Rs 1,000 crore in expenses that are suspected to be bogus in the probe at Hero MotoCorp. The department says it is going through digital data and various other documents as part of its investigation for alleged tax evasion. 

How did the stock market react?

The Hero MotoCorp stock fell nearly 9.5% on the NSE on the Tuesday before closing the day at Rs 2,219 apiece, down 6.68% from the previous close.

The stock is trading near its 52-week low and has lost nearly 22% of its value in the past six months.

On a consolidated basis, its net profit for the quarter ended December 2021 declined 31% to Rs 703.74 crore while revenue fell 18.5% to Rs 8,013.08 crore.

What did the company say about the raids?

"Officials from the IT Department visited two of our offices in Delhi and Gurugram and the residence of our Chairman and CEO Dr. Pawan Munjal. We have been informed that this is a routine inquiry, which is not uncommon before the end of the financial year," the company said in a statement as it looked to assure its stakeholders.

“We at Hero MotoCorp are an ethical and law-abiding corporate, and maintain the highest standards of impeccable corporate governance. In keeping with this philosophy, we are extending our full cooperation to the authorities,” it said.

 

Also read: Thought leadership: Srinivas Reddy, MD at MTAR Tech talks about recent block deal in equity

Share Market Today


How do you rate this article?

or

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

378X91-D3

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.


Open Free Demat Account
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest News
Marinetrans India IPO lists 15.38% higher and hits upper circuit

Premium listing for Marinetrans India IPO, then upper circuit

Net Avenue Technologies IPO lists 133.33% up but later hits -5% circuit

Strong listing for Net Avenue Technologies IPO, then lower circuit

What you must know about India Shelter Finance IPO?

India Shelter Finance Corporation Ltd was incorporated in 1998 and offers small and mid-ticket home loans. These loans are typically in the size of ₹5 lakhs to ₹50 lakhs. It provides home loans for construction, purchase, extension and also for renovation.