Emkay Global Financial's research report on Hero MotoCorp
HMCL’s Q1 results were a miss (6% on EBITDA), largely dragged by lower ASPs due to subdued spare sales, though underlying ICE margins rose by 80bps QoQ to 16.4%. HMCL expects to outperform industry amid rural revival and product actions. While the 2W industry has further recovery headroom (remains below FY19 peak); uptick in rural demand is an added growth trigger for HMCL – even as Xtreme 125R is driving rapid improvement in the fast growing, highly competitive 125cc motorcycle category (market share now at 22% vs 11% of Jan-24). We trim FY25E EPS by 2% on ASP miss, retain FY26E and introduce FY27E, building in 11%/16% CAGR in revenues/core EPS over FY24-27E.
Outlook
We maintain BUY with revised upwards SoTP-based TP of Rs 6,350/sh (core PER of 23x rolled-over to Jun-26E vs Mar-26E earlier). HMCL is our top pick in OEMs.
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