Axis Securities gives 'BUY' rating to Hero MotoCorp stock on EV expansion, Premia store growth plans; check price target

Hero Motocorp has successfully built a strong motorcycle product portfolio with the launch of differentiated products in FY24.

The analysts at the brokerage Axis Securities are bullish on Hero Motocorp on the company's plans to expand its EV business and grow its Premia stores.

The domestic brokerage gave a 'BUY' call on the counter  along with a target of Rs 6,015 per share, which implies a nearly 15 percent upside from its closing price of Rs 5,240 on August 20.

In the last one year, the counter went up by nearly 80 percent as per BSE data, contrary to 24.41 percent rise in Sensex.

With the launch of differentiated products in FY24, the company has successfully built a strong motorcycle product portfolio. In FY25, the company plans to introduce both ICE and EV models in the scooter space, along with newer models in the premium motorcycle segment.

The brokerage said, "Hero has a clear strategy to capture market share in the premium 2W category, expand its EV business, and grow its Premia stores (targeting 100+ stores in FY25)."

"Considering the stability in commodity prices, enhanced operational efficiency in Electric Vehicles (EVs), and the upward trend in Average Selling Price (ASP) driven by premiumization, a conservative estimated EBITDA margin of 14-15 percent for FY25/26E has been factored in," it added.

The company’s EBITDA margin in Q1FY25 was 14.4 percent and is expected to improve as operations scale up, product localization efforts in the EV segment advance, cost engineering activities are implemented, and management focuses on exports in key geographies.

In a recent investor presentation, the two-wheeler major informed its shareholders that it will start Brazil operations by fourth quarter of the financial year 2025. The dispatch has already started to Philippines in March 2024, it said.

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