Hero Honda has been wracked by future growth concerns lately and these worsened with reports predicting a poor March 2003 for the two-wheeler segment.

As a result, the Hero Honda scrip slumped 3% to Rs 208.80 in mid-morning trades on BSE. Volumes, though, were substantial at 240,000 shares (in just one-and-a-half hours of trading). It usually takes the stock an entire session to notch up these volumes.

The stock has been on a roller coaster ride on the bourses for some time now. In the last few months, the stock has moved in a wide band - Rs 290-Rs 205. From Rs 230.85 on 11 March 2003, the stock has shed 9.5% to the current Rs 208.80.

The latest fall on the counter comes amid market talk that the company's vehicle sales for the ongoing month (March 2003) will be poor, as will be for the entire motorcycle segment.

The poor demand from the rural sector as a result of a bad monsoon has prompted this reversal, it is believed.

Motorcycle sales increased by a mere 11% to 3,08,667 units during January 2003. In February 2003, sales registered a growth of 15% to 3,08,994 units. Between April 2002 and February 2003, the segment registered a growth of 32% to 34,24,966 units.

As of now, the high growth rate in motorcycle sales achieved in earlier quarters seems unsustainable over the medium to long term. This as penetration levels of motorcycles has reached a phase from where incremental growth can only be tepid. Currently, about 70 million households own two-wheelers in the country. The counter argument, however, is that there is a huge overseas market waiting to be tapped. And the biggies like Bajaj Auto and Hero Honda are recognising exports as their thrust areas. Industry estimates agree that the growth rates may eventually settle down to a more sustainable range of 15-20% in the future.

BSE code: 500182