Hero MotoCorp’s stock rose by 5 percent on November 18 after brokerage firms such as Jefferies, Nomura, and Nuvama Institutional Equities reaffirmed their ‘Buy’ ratings, pointing to rural demand recovery, upcoming product launches, and margin enhancements as major factors for growth.
At 9:17 AM, shares were trading 3.5 percent higher at Rs 4,764. So far this year, Hero MotoCorp’s shares have increased nearly 16 percent, significantly outperforming the Nifty 50, which gained 8 percent in the same timeframe.
Nomura adjusted its target price upwards to Rs 5,805, citing strong Q2 performance that exceeded expectations. The brokerage underscored the strong rural demand witnessed during the festive period, bolstered by a favorable monsoon. It also anticipates growth opportunities from new premium motorbikes and electric vehicle launches, noting that Hero’s strategy to broaden its network and sustain a margin range of 14-16 percent reflects its commitment to long-term growth.
Nuvama maintained its Buy recommendation with a target price of Rs 6,200, highlighting Hero MotoCorp’s strong performance and growth potential. It stressed the company’s capacity to capitalize on the upturn in the two-wheeler industry, particularly in rural areas. The brokerage expects an 8 percent compound annual growth rate (CAGR) in revenue and a 10 percent CAGR in core earnings during FY24-27, underpinned by healthy free cash flows and a 4 percent dividend yield.
Jefferies also kept its ‘Buy’ rating on the stock but lowered the target price to Rs 5,500 due to concerns regarding market share losses in two-wheelers and unfavorable demand shifts. The firm believes that the two-wheeler sector is set for double-digit growth over the next three years, and any achievements in the segments of premium bikes and electric vehicles would be viewed positively.
Hero MotoCorp is optimistic about exceeding industry growth in the upcoming quarters, driven by new product launches, increasing demand, and a boost from the festive season. The company intends to introduce three new motorcycles—Xpulse 210, Xtreme 250R, and Karizma—within the next six months, along with plans to expand its premium retail network to over 100 Premia locations by the end of FY25. The firm is also enhancing its scooter offerings with three internal combustion engine models by March 2025 and expanding its VIDA electric vehicle product lineup across all price ranges.
In Q2 FY25, the standalone net profit increased by 14 percent year-on-year to Rs 1,204 crore, while revenue rose by 11 percent to Rs 10,483 crore. The EBITDA margin improved to 14.5 percent, up from 14.1 percent the previous year. Both net profit and revenue surpassed Moneycontrol’s estimates, which had projected net profit at Rs 1,147 crore and revenue at Rs 10,223 crore.
