Accumulate Hero Motocorp; target of Rs 5911: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Hero Motocorp with a target price of Rs 5911 in its research report dated August 15, 2024.

Broker Research

August 19, 2024 / 13:29 IST

Accumulate

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Hero Motocorp

HMCL’s Q1FY25 standalone revenue increased by 15.7% YoY, 3% lower than PLe/BBGe. Despite healthy volume growth of 13.5% YoY/10.3% QoQ, ASP declined by 3.4% QoQ due to lower spares sales and slight mix impact. Its EBITDA margin came in 14.4% after accounting for the 190bps impact from the EV business; its ICE margin stood at 16.4%. Decent overall performance led APAT to increase by 18.8% YoY. Going ahead, the management aims to scale up production of Xtreme125R having received healthy response from customers. Additionally, it has planned a slew of new launches and refreshers in ICE and EV segments in the upcoming quarters, which shall aid in volume expansion. We revise our estimates downwards by 1-2% over the forecast period to factor in the mix impact on its ASP profile. However, we maintain our positive view on HMCL based on 1) scale-up plan of Xtreme125R motorcycle in response to healthy demand, 2) healthy demand in rural & urban region during festive period, could boost volume growth, 3) healthy portfolio in the 125cc segment, which will help sustain margin profile and market share gains, and 4) steady growth in exports business aided by expansion into different regions.

Outlook

We maintain our “ACCUMULATE” rating with a TP of Rs5,911 (previous Rs5,914), valuing the core business at 20x and its stake in NBFC & Ather at Rs220.

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