Hero MotoCorp's Q1 has analysts mixed on outlook; Stock down 4%

has a slew of product launches planned in both ICE and EV categories in the coming quarters

Shares of Hero MotoCorp tanked 4 percent to Rs 5,031 in early trade after the world's largest two-wheeler's Q1 show missed estimates. This kept analysts divided on outlook with some suggesting that new launches may help, while some fear a possible downward volume trajectory.

During the quarter, it reported a 36 percent year-on-year rise in Q1 FY25 standalone net profit to Rs 1,122.63 crore led by strong sales, a rural market recovery, and new launches like the Xtreme 125R. A Moneycontrol poll of eight brokerage estimates pegged Hero MotoCorp's fiscal first quarter net profit at Rs 1,190 crore, and revenue at Rs 10,520 crore.

Follow our LIVE blog for all the latest updates

Should you buy, sell, or hold the Hero MotoCorp stock? Here's what experts say.

Goldman Sachs continues to rate Hero MotoCorp as a 'sell' with a target price of Rs 4,250, a massive downside of 19 percent from the current market levels. Analysts say that the average selling price (ASP) was down 3 percent quarter-on-quarter, which may indicate some level of discounting due to channel inventory build-up. Goldman Sachs also sees some risk to Hero's volume trajectory in the future.

Also read: Check how much money Sachin Tendulkar made from FirstCry listing; Ratan Tata earns 5-7x returns in IPO

On the contrary, Jefferies retains its 'buy' rating on Hero MotoCorp with a target price of Rs 5,650. The brokerage notes good growth but highlights that EBITDA missed estimates due to lower-than-expected ASP and margin performance. Despite this, Jefferies points to a strong product pipeline, with several launches planned in the electric vehicle (EV) and internal combustion engine (ICE) categories.

JPMorgan maintains its 'overweight' rating on Hero MotoCorp with a target price of Rs 5,240. However, the first-quarter earnings were below expectations, driven by weaker pricing. The company's average selling price (ASP) and margin trends underperformed compared to its mass-market two-wheeler peers, such as Bajaj Auto and TVS Motor. Given these results, JPMorgan anticipates some downward revisions to consensus forecasts and expects the stock to open weaker than the market today potentially.

Read more: Crude oil gains on falling US inventory, simmering tension in Middle East

"It expects the momentum to build up in the following quarters on account of positive customer sentiments, good monsoons and the upcoming festive season. The company has a slew of product launches planned in both ICE and EV categories," Hero MotoCorp said in a press release. "Overall, we are optimistic about the demand trajectory for the coming quarters. Our product
launches and strategic initiatives are well‐aligned to capitalize on this positive market
environment, ensuring continued growth and value creation for all our stakeholders," it added.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.