Shares of Hero MotoCorp surged by over 6% in early trading on Monday, propelled by the release of the leading two-wheeler manufacturer’s Q4 results, which exceeded expectations. The stock rallied by 6.25% to reach an intra-day high of Rs 4,922 per share on the NSE.
On Wednesday, May 8, Hero MotoCorp announced an 18% year-on-year (YoY) rise in its standalone net profit, totaling Rs 1,016 crore compared to Rs 858.93 crore recorded in the corresponding period of the previous year.
Revenue from standalone operations for the quarter surged by 14% to Rs 9,519 crore from the previous year’s Rs 8,306.78 crore reported in the corresponding quarter.
In Q4FY24, the company reported sales of 13.92 lakh units of motorcycles and scooters, a notable increase from the 12.70 lakh units sold in Q4FY23. Moreover, the total units sold for the entire financial year 2024 reached 56.21 lakh, marking a rise from the 53.29 lakh units sold in FY23.
Brokerages on Hero MotoCorp
Motilal Oswal on Hero MotoCorp
Motilal Oswal has reiterated its ‘BUY’ rating for Hero MotoCorp, the world’s largest manufacturer of motorcycles and scooters. They have set a target price of Rs 5,320, reflecting an 18x FY26E EPS along with Rs 137 for Hero FinCorp and Rs 132 for Ather after applying a 20% holding company discount.
Hero MotoCorp’s performance in the fourth quarter of FY24 has been described as meeting expectations. Noteworthy highlights include gross margins standing at 33.6%, slightly surpassing the estimated figure of 32.7%.
An in-line EBITDA margin of 14.3%, marking a significant increase of 130 basis points YoY despite challenges such as increased other operating expenses, notably due to EV spending.
Looking ahead, Motilal Oswal anticipates a promising growth trajectory for Hero MotoCorp, projecting a Compound Annual Growth Rate (CAGR) of approximately 13.5%, 15%, and 17% in revenue, EBITDA, and Profit After Tax (PAT) respectively over the period from FY24 to FY26E.
JM Financials on Hero MotoCorp
With an estimated standalone EPS to post around 14.5% CAGR over FY24-26E, JM Financials maintains a BUY rating on Hero MotoCorp. They set a target price of Rs 5,400 by March 2025, based on a forward earnings multiple of 20x. Hero MotoCorp remains JM Financials’ top pick in the 2W space.
According to a recent report by JM Financials, Hero MotoCorp (HMCL) exhibited a robust performance during 4QFY24, with EBITDA standing at 14.3%, marking a notable increase of 120 basis points YoY. This figure was in-line with JM Financials’ expectations, attributed to softening commodity costs and a favorable product mix.
The report highlights that demand momentum for Hero MotoCorp remains strong, with expectations of double-digit revenue growth in FY25, primarily driven by the 125cc+ segment. The company’s recent premium launches have garnered positive reception in the market.
In the near term, Hero MotoCorp’s focus is on scaling up distribution and production of these launches, along with emphasis on Electric Vehicles (EVs). JM Financials anticipates positive operating leverage and cost control initiatives to bolster margins.
The report underscores JM Financials’ belief that Hero MotoCorp is poised for market share recovery, supported by a new product cycle and potential rural recovery. They estimate a compound annual growth rate (CAGR) of approximately 8.5% in volumes over FY24-26E.
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