Hero MotoCorp, the world’s largest two-wheeler manufacturing company, has reported a standalone profit of Rs 1,053.8 crore for the quarter ending September FY24, reflecting a remarkable 47.2% growth compared to the same period the previous year. This impressive performance is attributed to the company’s healthy operational results. During the quarter, revenue from operations increased by 4% YoY, reaching Rs 9,445.4 crore.
Jefferies maintains a buy rating on Hero MotoCorp’s stock with a target price of Rs 3,500, as the brokerage house sees robust Q2 EBITDA growth, with EBITDA per vehicle rising by 5% QoQ to reach a new all-time high.
In the report, the brokerage house stated, “In the second quarter (2Q), Hero’s EBITDA grew by 28% YoY, in line with Jefferies’ expectations. Despite a 1% YoY decline in volumes, the Average Selling Price (ASP) increased by 3% QoQ, thanks to price hikes.” The report also added that the gross margin expanded by 80 basis points (QoQ), while the EBITDA margin increased by 30 basis points (QoQ) to 14.1%.
EBITDA per vehicle surged by 5% QoQ, reaching a new all-time high. The Profit After Tax (PAT) experienced a remarkable 47% YoY growth, surpassing Jefferies’ expectations by 5%, primarily driven by higher financial income. It’s worth noting that higher working capital has resulted in Operating Cash Flow (OCF) lagging behind EBITDA in the first half (1H), but this could be attributed to seasonal factors related to the festive season’s timing.
Hero MotoCorp’s market capitalization stands at a substantial 61.58 trillion crore on the NSE. The Price-to-Earnings (P/E) ratio is 21.03, and the dividend yield is 3.25%. While the stock price of Hero MotoCorp experienced a slight decrease of 1.95% over the past week, it has delivered positive returns of 2.22% in the last month and an impressive 24% over the last 6 months.
When considering the Year-to-Date (YTD) and annual performance, the stock has demonstrated significant growth, with a 17% increase in the past year and a 13.46% rise in YTD returns.