Buy Hero Motocorp; target of Rs 2862:Motilal

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26 Aug, 2025 12:21

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Motilal research report on Hero MotocorpNet sales declined 1.1% YoY to INR68.3b (our estimate: INR67b) on volume decline of 7% YoY (-4.3% QoQ), as rural demand remained weak. However, realization grew 6.3% YoY (3% QoQ) to INR43.4k/unit (our estimate: INR42.4k/unit) on higher spare part sales (+15% YoY/+30% QoQ) and better mix (125cc motorcycle). EBITDA margin expanded 230bp YoY (70bp QoQ) to 15.8% (our estimate: 15.4%) on lower commodity cost and lower ad spends (2.15% of sales). Also, higher other income at INR1b (our estimate: INR950m) boosted adjusted PAT to INR7.7b (our estimate: INR7.3b).We raise our EPS estimates by 5% to INR158 for FY16 and by 1% to INR179 for FY17 to factor in EBITDA margin expansion on lower raw material cost. The stock trades at 16.5x FY16E and 14.6x FY17E EPS. Maintain Buy with a target of INR2,862 (16x FY17E EPS, in line with LPA).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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