Shares of Hero MotoCorp, India’s leading two-wheeler manufacturer, jumps over 5% to open at Rs 4,835 on NSE after the company reported a 14% growth in its standalone net profit for the second quarter, reaching Rs 1,204 crore.
Revenue from operations during the reporting period increased by 11% year-on-year (YoY), reaching Rs 10,463 crore. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) also saw a robust growth of approximately 14% YoY, rising to Rs 1,516 crore.
Additionally, EBITDA margins improved by 40 basis points to 14.5%, reflecting better cost management and operational efficiency.
Strong Volume Growth and Record Retail Sales
The company’s volumes in Q2 stood at 15.2 lakh units, compared to 14.16 lakh units during the same period last year, marking a steady increase.
Furthermore, the recently concluded festive season saw Hero MotoCorp achieve its highest-ever retail sales, clocking 16 lakh units.
Strong H1 Performance
In the first half of the fiscal year, Hero MotoCorp reported a 13% YoY growth in revenue, reaching Rs 20,607 crore. Profit After Tax (PAT) surged by 24% YoY to Rs 2,326 crore, further underscoring the company’s strong financial health and its ability to capitalize on favorable market conditions.
With a strong second quarter and an optimistic outlook for the remainder of the year, Hero MotoCorp continues to demonstrate robust growth and resilience in the competitive two-wheeler market.
Record Revenue from Parts and Accessories
Hero MotoCorp also achieved a significant milestone in its parts, accessories, and merchandising segment, reporting the highest-ever quarterly revenue of Rs 1,456 crore. This highlights the company’s expanding portfolio beyond vehicles, contributing positively to overall revenue growth.
Positive Outlook for the Industry
Hero MotoCorp expressed optimism about the future, noting that the strong monsoon season is expected to sustain the momentum in the industry. The company is hopeful that the positive market conditions will continue to drive demand and growth in the upcoming quarters.
Brokerages on Hero MotoCorp
Jefferies Maintains Buy Call on Hero MotoCorp
Jefferies has maintained its “Buy” call on Hero MotoCorp but revised its target price down to Rs 5,500 per share following the company’s second-quarter results. The brokerage noted that the Q2 EBITDA growth was in line with its expectations, and the EBITDA per vehicle reached a new high, reflecting the company’s operational efficiency.
Jefferies also expressed confidence that India’s two-wheeler market is poised for strong double-digit growth over the next three years, driven by favorable market conditions.
However, the firm highlighted concerns regarding the company’s declining market share in the two-wheeler segment and adverse shifts in demand profiles, which could impact its performance.
The brokerage believes that any success Hero MotoCorp achieves in the premium bikes and electric vehicle (EV) segments will be a significant positive catalyst for the company.
Nomura Maintains Buy Call on Hero MotoCorp
Nomura has reiterated its “Buy” call on Hero MotoCorp with a target price of Rs 5,805 per share, citing healthy earnings growth and attractive valuations. The brokerage noted that the company’s second-quarter results were in line with expectations, and it believes there is room for margin improvement moving forward.
Nomura sees rural growth as a key catalyst for Hero MotoCorp, highlighting early signs of a rural recovery that will support sales, especially with a 54% rural market share. The brokerage expects the two-wheeler industry to grow by 10% over FY25-26, driven by a rebalancing of growth and positive monsoon conditions.
Additionally, Nomura anticipates that as the drag from electric vehicle (EV) sales reduces with the introduction of new models and the benefit from the Production-Linked Incentive (PLI) scheme, Hero MotoCorp’s margins are likely to improve.
Stock Performance in Last One Year
The shares of Hero MotoCorp have demonstrated mixed returns across various time intervals. In the last month, the stock delivered a negative return of 14.71%. Over the past six months, it exhibited a significant decline, with negative returns of 10.45%, indicating a strong downtrend.
Whereas Year-to-date, Hero MotoCorp shares have surged by 11.22%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 40.36% in the last twelve months.
(Disclaimer: Views, recommendations, and opinions expressed are personal and do not reflect the official position or policy of Financial Express.com. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)