Hero MotoCorp’s stock saw a 1.56 percent increase to Rs 4,577.45 on March 2 following the company’s report of a 19 percent surge in February sales compared to the same period last year.
The leading manufacturer of motorcycles and scooters in the country sold 468,410 units in February, marking a significant growth from the 394,460 units sold in February 2023.
Hero MotoCorp is focusing on ramping up the volumes of its Harley-Davidson X440 and Mavrick 440 models, with the first phase expected to be completed by the middle of this year.
January 2024 saw the company selling 433,598 units. Additionally, Hero MotoCorp nearly doubled its exports in February, reaching 23,153 units compared to 12,143 units in the same month last year.
The company is also expanding its presence in the electric vehicle (EV) sector, with the launch of the Vida V1 model and plans to introduce more scooters and motorcycles. Four scooters are slated for launch in FY25, with a focus on expanding the charging infrastructure in collaboration with Ather.
While the stock has recorded an impressive 85 percent gain over the past year, it has experienced a slight decline of over 3 percent in the last month.
Financial Performance
Hero MotoCorp reported a substantial 51 percent year-on-year increase in standalone net profit to Rs 1,073.38 crore for the quarter ended December 31, 2023. This surge was attributed to factors such as easing input costs, operative leverage, higher average selling price, price hikes, and increased volumes. In comparison, the net profit stood at Rs 711.06 crore during the same period the previous year.
The company’s turnover for the third quarter of the fiscal grew by 21 percent to Rs 9,723.73 crore, compared to Rs 8,030.98 crore in Q3FY23.
Brokerage Recommendations
Nuvama forecasts a revenue/earnings compound annual growth rate (CAGR) of 10 percent/23 percent over FY23–26E, with healthy free cash flow (Rs 38 billion per year) and a dividend yield of approximately 3 percent. The brokerage maintains a “buy” rating and has raised the target price to Rs 5,600 from Rs 5,000.
Despite maintaining a robust launch pipeline focused on the 125cc and above segments, HDFC Securities remains cautious about substantial recovery, considering the company’s mixed track record with new launches in these segments. The domestic brokerage has a “reduce” recommendation on the stock but has raised the target price to Rs 3,535 from Rs 2,844, as it rolls forward to March 2026 earnings.
