India’s largest 2-wheeler maker posted an 18% increase in net profit at Rs 1,016.05 crore, largely in line with street estimates, for the fourth quarter while revenue from operations in the quarter under consideration rose 14.6% to Rs 9,519.30 crore.
The company sold 13.92 lakh two-wheelers last quarter, which is an increase of 9.6% over 12.70 lakh units sold in the year-ago period.
Here’s what brokerages have to say:
Jefferies
As 2-wheelers are poised for growth, the company expects industry revenue to grow in double digits. The quarter was good, with an all-time high EBITDA/vehicle for Hero MotoCorp. The brokerage foresees a 17% EPS CAGR over FY24-26.Jefferies maintained their ‘buy’ rating with a target price of Rs 5,650.
Bank of America
Hero’s earnings were in-line with BofA estimates, however, FY25 can be a big year as Hero 2.0 strategy may bear fruit in the financial year backed by rural recovery, new launch scale up, more EVs in pipeline and capacity ramp up for new launches.BofA has set a target price of Rs 5,400 with a ‘buy’ rating.
Motilal Oswal
“We expect HMCL to deliver a volume CAGR of 9% over FY24-26E, driven by new launches in 125cc, scooters and premium segments, a ramp-up in exports. HMCL will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments. We expect a CAGR of 13.5%/15%/17% in revenue/EBITDA/PAT over FY24-26E,” said a report by Motilal.
The brokerage maintained ‘buy’ rating on the stock with a target price of Rs 5,320.
Kotak Institutional Equities
Hero MotoCorp reported EBITDA which was 3% below KIE’s estimates.
Better-than-expected gross margin print was offset by higher marketing spends toward EV and premium motorcycle segments during the quarter. However, Kotak Equities believes it will be challenging for the company to make significant inroads in the premium motorcycle and scooter segments, given its weak brand positioning and strong customer inclination toward established brands.
KIE has retained their ‘sell’ rating on the stock with a target price of 3,950.
JM Financial
During 4QFY24, EBITDA margin for Hero MotoCorp stood at 14.3% (+120 bps YoY), inline with JM Financial estimates led by softening commodity costs and favourable mix. Near-term focus is on ramping-up distribution and production of these launches and EVs. Positive operating leverage and cost control initiatives are expected to support the margins. JMF believes that the company is at the cusp of market share recovery on the back of a new product cycle and expects the company to draw support from impending rural recovery leading to c.8.5% volume CAGR (over FY24-26E).
JM Financial maintained its ‘buy’ view and target price too, remains unchanged at Rs 5,400.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
