Stock in Action - Hero Motors 18 November 2024

Highlights

1. Hero Motor Share has shown steady growth, attracting investor attention in the two-wheeler sector.

2. Hero Motor Stock remains a top pick for investors due to its strong market position and consistent performance.

3. Hero Motors' Share Price has seen fluctuations, offering potential opportunities for long-term investors.

4. Hero Motor's Stock Price is impacted by quarterly results, making it a key focus for investors.

5. Hero Motor's Q2 Result demonstrated strong sales, supporting its position as a market leader.

6. Hero Motors Quarter 2 performance reflects a positive outlook, with improved margins and revenue growth.

Why Hero MotoCorp Share is in the News?  

Hero MotoCorp, India's largest two-wheeler manufacturer, has been in the spotlight recently due to multiple developments. The company’s Quarter 2 FY2024 results have sparked interest among investors as it showcased notable performance in key areas, supported by festive demand & new product launches. Additionally, Hero’s aggressive push into the electric vehicle (EV) segment & partnerships to expand its market presence have contributed to the buzz around its stock.  

Quarter 2 Highlights of Hero MotoCorp Ltd  

1. Net Profit Growth: Hero MotoCorp reported a 14% YoY increase in net profit, reaching ₹1,204 crore for the quarter ended September 2024.

2. Revenue Growth: The company's revenue grew by 11% YoY to ₹10,463 crore in Q2FY25.

3. EBITDA Growth: EBITDA rose by 14% YoY to ₹1,147 crore, reflecting operational efficiency.

4. Sales Volume: Hero MotoCorp sold 15.20 lakh units of motorcycles and scooters, marking a 7.3% growth YoY compared to 14.16 lakh units sold in the same quarter last year.

5. Market Reaction: Following the Q2 results, Hero MotoCorp's share price surged 5.12% on the BSE to ₹4,840.40 apiece.

6. Rural Demand Recovery: Analysts highlighted the company’s potential to benefit from a recovery in rural demand and its new product launches, driving robust volume growth.

Brokerage Overview and Outlook on Hero MotoCorp Shares

Hero MotoCorp shares have received a positive outlook from major brokerages following its strong Q2 FY25 performance. Analysts highlighted the company's ability to capitalize on rural demand recovery, margin improvements, and upcoming product launches, making it an attractive investment in the two-wheeler sector.

Nomura:
Highlighted growth opportunities from new premium bikes, EV launches, and strong rural demand driven by a favorable monsoon.Emphasized Hero MotoCorp’s focus on maintaining margins in the 14-16% range and long-term growth plans.

Nuvama Institutional Equities:
Projected an 8% revenue CAGR and 10% core earnings CAGR over FY24-27, supported by healthy free cash flows and a 4% dividend yield.Identified Hero’s ability to benefit from the ongoing two-wheeler industry upcycle, especially in rural markets.

Jefferies:
Remains optimistic about double-digit growth in the two-wheeler sector over the next three years and views success in premium bikes and EVs as key positives.

Growth Drivers and Outlook

Hero MotoCorp plans to launch three new premium bikes (Xpulse 210, Xtreme 250R, and Karizma XMR 250) within six months.

The company aims to expand its premium retail network to 100+ Premia stores by FY25-end and enhance its scooter portfolio with three ICE models by March 2025.

Its VIDA EV lineup will be expanded across various price points, reinforcing its presence in the electric vehicle segment.
Analysts anticipate Hero to outperform the industry in the coming quarters, driven by rising demand, festive season tailwinds, and strategic product diversification.

Overall, brokerages are optimistic about Hero MotoCorp's ability to sustain growth, driven by favorable market conditions, product innovation, and strategic network expansion.

Conclusion

Hero MotoCorp Ltd remains a dominant force in the two-wheeler industry, supported by its strong market presence, innovative product launches, & strategic focus on the EV segment. The company’s Q2 performance highlights its ability to adapt to evolving market dynamics & capitalize on festive & rural demand. With a clear roadmap for EV growth, rural penetration, & export expansion, Hero is poised to maintain its leadership while exploring untapped opportunities. The positive outlook from brokerage houses further reinforces confidence in the stock. For long-term investors, Hero MotoCorp offers a compelling mix of growth potential & resilience in the automotive sector.