Domestic brokerage firms remain optimistic about Hero MotoCorp Ltd, expecting the stock to rise by up to 30%. Last week, the world's leading motorcycle and scooter manufacturer introduced an after-service package for its VIDA V1 Pro electric scooter.
VIDA is Hero MotoCorp's developing mobility brand, and its new package allows clients to acquire an EV without fuss. "The pack provides an enhanced ownership experience, including privileges and services valid for five years. Customers will be able to take use of this one-of-a-kind after-sales package for free until April 30, 2024, according to the company's press statement.
Sharekhan has confirmed its 'buy' rating for Hero MotoCorp, citing a robust rebound in Ebitda margins, a strong reception to its current products, a continued focus on premiumization, and the growth of its EV markets. The company anticipates double-digit revenue growth in the two-wheeler industry in FY2025 and has guided growth ahead due to its product launch plans, it added.
"The premium scooter segment is expected to sustain traction in FY25. Hero Moto hopes to capture a significant market share in the premium motorbike class over the next five years. Commodity costs have steadied, and the company continues to aim for an Ebita margin of 14-16%. It would concentrate on more of its top ten export destinations, out of 50 in total," it stated.
Premiumisation in each sub-segments will drive the two-wheeler segment's revenue performance in the future years, as customer ambitions in each sub-segment have risen. According to market analysts, with continued economic investment, entry-level clients will benefit from increased affordability.
With a spate of launches and a fresh focus on the premium motorbike category, the company has gained traction in its operations, and the rebound in the two-wheeler segment is helping its topline performance, according to Sharekhan. Concentrating on brands, models, portfolios, and premium retailers.
Hero MotoCorp shares fell almost 1% to Rs 4,631.90 on Wednesday, with a total market capitalization of more than Rs 93,000 crore. The stock has increased by more than 100% in the last year, with a gain of more than 55% in the last six months.
"We believe Hero has room to stimulate demand in its key markets for entry-level products because, following the premium category, the 125cc segment has already recovered." With its Hero 2.0 outlets, the corporation is continuing to prioritize premiumization in its distribution chain. "We maintain our BUY rating on the stock with an unchanged target price of Rs 6,057," Sharekhan adds.
However, the brokerage has identified product failure risk amid aggressive launches, rising raw material costs and greater competition, as well as a delay in rural market recovery, as important concerns to the company's development prospects. Hero MotoCorp is one of Nuvama Institutional Equities' top auto picks, with overall volumes expected to climb by 6% year on year (YoY) to 5,50,000 units in fiscal year 2023-24. Previously, the firm had given the company a buy rating with a target price of $5,600.
