Hero Honda falls on low interim dividend hopes

Hero Honda shares drifted lower in a steady market. Dealers say this reflects lower expectations about the special interim dividend that the company has proposed. The stock closed at Rs 2,006.25, after touching a high of Rs 2,077 earlier in the session, as most investors chose to play it safe by booking profits.

On Thursday, the stock had rallied over 4%, after the company said it would consider a special interim dividend at a board meet next Tuesday. In January this year, the company had announced a special dividend of 500% or Rs 10 per share. Dealers tracking the stock say the dividend yield is unlikely to be very attractive, and the focus is likely to shift to valuations. At roughly 18 times estimated FY11 earnings, the two-wheeler major is fairly priced, say brokers.

Contributed by Nishanth Vasudevan, Santosh Nair & Shailesh Menon