While the market is on fire with the news of Honda exiting the JV with Hero group, a relationship that has lasted for over two decades in the Indian market, sources are of a view that the deal is currently stuck over the valuation issues.

While at the current market price, the valuation of Honda's share come at Rs. 9,000 crore, the PE firms feel that post-exit, the scrip would trade much lower.

While it has also been learned that after Honda informed the Hero Group about its intentions to exit the JV, the Hero Group has contacted a handful of PE companies in the country i.e. KKR, Texas Pacific, Blackstone, Carlyle, Clayton Subilier & Rice and Temasek to pick up stakes in the, company. It is to be mentioned here that after Honda started its wholly owned subsidiary in the form of HMSI, it has been trying to set its operations free.

The market watchers are of a view that Honda will be benefited from this move and Hero Group may find itself in a tight spot as Honda is the R&D expert in this JV.

However, Honda will have to do away with the extensive network of the Hero Group which is present in almost the entire country and will have to bank on its high R&D if, it finally announces to part ways with the Hero Group.