Buy Hero MotoCorp; target of Rs 4480: Motilal Oswal

Motilal Oswal's research report on Hero MotoCorp

Domestic 2W demand witnessed a strong rebound during the festival period, reporting record volumes of 2.2m units (+22% YoY) during the 33-days period. Normally, growth tends to slow down after the festivals, but this year it has continued well beyond that period. This is partly due to the strong demand in the marriage season, especially in the central and northern regions. This, we believe, should benefit HMCL the most, as it has a strong presence in states like UP (~54% market share), Rajasthan (~58%), MP (~42%) and Bihar (~45%). These states collectively contribute ~35% of the domestic 2W demand. The ongoing growth momentum should ensure an expansion in HMCL’s core 100CC/110CC portfolio, which contributes ~80% of its overall volumes.

Outlook

Recovery in its core product portfolio, coupled with its well-planned strategy to expand in both premium and electric vehicles (EVs) make HMCL better placed in the 2W OEM space. To account for this, we have increased the target multiple for HMCL. We now value it at 18x Dec’25E EPS (vs. 16x Sep’25E EPS earlier). Additionally, we assign INR231/INR74 to Hero FinCorp/Ather after applying a 20% holding company discount). We, therefore, arrive at our TP of INR4,480. Reiterate BUY.