Hero MotoCorp's shares jumped 5 percent on November 18 after brokerages like Jefferies, Nomura, and Nuvama Institutional Equities reiterated their 'Buy' ratings, citing rural demand recovery, upcoming launches, and margin improvements as key growth drivers.
At 9.17 AM, the stock traded 3.5 percent higher at Rs 4,764. Year-to-date, Hero MotoCorp has risen nearly 16 percent, significantly outperforming the Nifty 50's 8 percent gain during the same period.
Nomura raised its target price to Rs 5,805 citing strong Q2 results which also beat estimates. The brokerage highlighted Hero MotoCorp's strong rural demand during the festive season, boosted by a healthy monsoon. The brokerage also sees growth potential from new premium bikes and EV launches, adding that Hero's plans to expand its network and maintain a 14-16 percent margin range underline its focus on long-term growth.
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Nuvama reaffirmed its Buy stance with a target price of Rs 6,200, citing Hero MotoCorp's robust performance and growth prospects. It emphasised Hero MotoCorp's ability to benefit from a two-wheeler industry upcycle, especially in rural markets. The brokerage forecasts an 8 percent revenue CAGR and a 10 percent core earnings CAGR over FY24-27, supported by healthy free cash flows and a 4 percent dividend yield.
Jefferies retained its 'Buy' call on the stock but reduced the target price to Rs 5,500 on concerns over market share declines in two-wheelers and adverse shifts in demand profiles. The brokerage firm believes that the two-wheeler sector is poised for double-digit growth over the next three years and any success in premium bikes and EVs were seen as a positive.
Hero MotoCorp is optimistic and expects to outpace industry growth in the coming quarters fueled by fresh launches, rising demand, and a festive season boost.
Also Read | Hero MotoCorp confident of outpacing the industry, posts record festive sales in Q2
Hero MotoCorp plans to launch three new bikes—Xpulse 210, Xtreme 250R, and Karizma XMR 250—within six months, alongside expanding its premium retail network to 100+ Premia stores by FY25-end. The company is also boosting its scooter portfolio with three ICE models by March 2025 and expanding its VIDA EV lineup across all price points.
In Q2 FY25, standalone net profit surged 14 percent YoY to Rs 1,204 crore while revenue grew 11 percent to Rs 10,483 crore. EBITDA margin improved to 14.5 percent from 14.1 percent last year. Both the net profit and revenue beat Moneycontrol's poll which projected the net profit at Rs 1,147 crore and revenue at Rs 10,223 crore.
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