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Hero MotoCorp zooms 6% on robust Q4 performance; brokerages remain bullish

The company's reported better-than-expected gross margins but it was offset by higher, marketing spends toward EV and premium motorcycle segments during the quarter

Hero MotoCorp

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Shivam Tyagi New Delhi

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Hero MotoCorp stocks surged up to 5.7 per cent at Rs 4,889 per share on the BSE in Thursday’s intraday deals. This came after a stellar performance in January-March quarter earnings of the financial year 2023-24.

Majority of the brokerages also remained bullish on the stock after a robust fourth quarter seeing healthy growth rate in the future as well while some also remained cautious.

The company’s reported better-than-expected gross margins were offset by higher, marketing spends toward EV and premium motorcycle segments during the quarter, said analysts. 

Analysts at Kotak Institutional Equities believe that with the company’s multiple product launches, it will be a challenge for it to make big inroads in the premium motorcycle and scooter segments, given the company’s weak brand positioning. The brokerage retained its ‘Sell’ rating with a fair value of Rs 3,950.

However, analysts at JM Financials noted that Hero MotoCorp is at the cusp of market share recovery on the back of a new product cycle and expect the company to draw support from impending rural recovery leading to a 8.5 per cent volume CAGR (over FY24-26E). 

“We estimate standalone EPS to post c.14.5 per cent CAGR over FY24-26E. Maintain BUY with Mar’25 TP of INR 5,400 (20x forward earnings). Hero remains our top pick in the 2W space,” the JM Financials said in a result update. 

Those at Nuvama also remained positive that the two wheeler giant is a key beneficiary of the likely uptick in rural demand owing to its strong network. They forecast revenue with a CAGR of 11 per cent to 15 per cent over FY24–26E. The brokerage gave a ‘Buy’ call with an unchanged target price Rs 5,800. 

Analysts at Motilal Oswal also remained bullish on the auto company’s future, predicting a healthy growth rate of 13.5 per cent, profit after tax growth of 15 per cent and Ebitda increase of 17 per cent over FY24- 26E. It reiterated its ‘Buy’ rating on the stock with a target price of Rs 5,320 

The two-wheeler giant posted a standalone net profit of Rs 1,016.05 crore for the March quarter, marking an increase of over 18 per cent from the year-ago period's Rs 858.93 crore. 

Standalone revenue from operations for the quarter stood at Rs 9,519 crore, a 14.6 per cent increase from Rs 8,306.78 crore in the corresponding period of the previous fiscal year.

The company declared a final dividend of Rs 40 per share for FY24. Hero MotoCorp sold 13.92 lakh units of motorcycles and scooters in Q4FY24 compared to 12.70 lakh units in Q4FY23. For the entire fiscal year, the number of units sold was 56.21 lakh versus 53.29 lakh units in FY23.

For the full financial year, net profit stood at Rs 3,968 crore, up 36 per cent YoY, and revenue from operations was Rs 37,456 crore, a 11 per cent rise over the previous year. Ebitda for Q4FY24 was Rs 1,359 crore, a 25 per cent increase YoY. 

At 10:15 AM, the shares of the company were trading 5.65 per cent higher at Rs 4,885.45. By comparison, the S&P BSE stood 0.54 per cent lower at 73,068 levels. 

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First Published: May 09 2024 | 10:24 AM IST

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