Buy Hero MotoCorp; target of Rs 5877: Geojit Financial Services

Geojit Financial Services is bullish on Hero MotoCorp has recommended buy rating on the stock with a target price of Rs 5877 in its research report dated August 21, 2024.

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August 22, 2024 / 11:46 IST

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Geojit Financial Services research report on Hero MotoCorp

Hero MotoCorp (HMCL) is India’s leading two-wheelers manufacturer, with nearly 32% share of the domestic motorcycle market in volume terms. The company has eight manufacturing facilities — six in India and one each in Colombia and Bangladesh. In Q1FY25, its standalone revenue rose 15.7% YoY to Rs. 10,144cr, primarily owing to rural demand. EBITDA grew 21.0% YoY to Rs. 1,460cr and EBITDA margin expanded 60bps YoY to 14.4%, aided by better product mix and cost savings. HMCL reported positive trends in domestic, electric vehicle (EV), and global businesses, and anticipates increased momentum in Q4 due to positive customer sentiment, a favourable monsoon and upcoming festive season. Additionally, the company is expected to launch products in internal combustion engine (ICE) as well as Electric vehicle (EV) categories. Hence, we retain our BUY rating on the stock with a revised target price of Rs. 5,877, based on 22.5x FY26E adjusted earnings per share (EPS).

Outlook

HMCL has seen favourable trends across its domestic, EV and global businesses in the last quarter, with the company anticipating an acceleration in the subsequent quarters, attributed to positive customer sentiment, a favourable monsoon and upcoming festive season. Furthermore, the company has announced a series of product launches in the ICE as well as EV categories. Hence, we retain our BUY rating on the stock with a revised target price of Rs. 5,877, based on 22.5x FY26E adjusted EPS.

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