Buy Hero MotoCorp; target of Rs 4000: ICICI Direct

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26 Aug, 2025 12:21

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Hero MotoCorp (HMCL) reported a healthy Q3FY21 performance. Total 2-W sales volume was at 18.45 lakh units, up 19.7% YoY. Consequent net sales were at Rs 9,776 crore, up 39.7% YoY amid 3% QoQ increase in ASPs to ~Rs 53,000/unit. EBITDA margins at 14.5% were up 80 bps QoQ tracking 60 bps gross margin expansion on a QoQ basis. PAT for the quarter came in at Rs 1084 crore, up 23.2% YoY. HMCL declared interim dividend of Rs 70 for FY21 (includes special dividend of Rs 5; record date – February 16, 2021).

We build 17% sales, 20% PAT CAGR in FY21E-23E. We upgrade HMCL from HOLD to BUY, valuing it at Rs 4,000 (20x P/E on FY23E EPS; previous target price Rs 3,480)

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