Accumulate Hero Motocorp; target of Rs 3575: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Hero Motocorp with a target price of Rs 3575 in its research report dated November 03, 2023.

Broker Research

November 06, 2023 / 11:18 IST

Accumulate

26 Aug, 2025 12:21

Volume

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Prabhudas Lilladher's research report on Hero Motocorp

Hero Motocorp (HMCL) EBITDA margin increased by ~40bps QoQ, led by lower RM (-80bp) and employee expenses (-50bps) which was partially offset by higher other expenses (-90bps). HMCL is seeing recovery in the rural market and is aiming to grow ahead of the industry on back of aggressive model launch and good start to festive season. The company is confident of continuing the growth momentum post festive season and we concur given low base. The EV 2W “Vida” is on track to reach to 100 cities by CY23, followed by capacity expansion and product portfolio in FY25. Moreover, good demand is expected in premium bikes, Karizma and X440 with 10k monthly production capacity.

Outlook

We expect margins to improve in the near term from operating leverage, premiumisation, cost controls and stable commodity costs (we build in ~210bps increase over FY23-26E). Key monitorables will be 1) performance of new launches, 2) uptick in EV volumes, 3) competition in core segments and 4) recovery in rural markets. Maintain ‘Accumulate’ at TP of Rs 3,575 (at 16x on Sep-25E standalone EPS, Rs 83 for Fincorp and Rs 78 for Ather).

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