Overweight on Hero MotoCorp, target price Rs 5,285: Axis Securities

Axis Securities has an overweight call on Hero MotoCorp with a target price of Rs 5285. The current market price of Hero MotoCorp is Rs 3630. Hero MotoCorp, incorporated in 1984, is a Large Cap company with a market cap of Rs 72752.83 crore, operating in the Auto sector.

Hero MotoCorp Ltd. key Products/Revenue Segments include Motorised Two Wheelers Upto 350cc Engine Capacity, Spares (Two Wheelers), Sale of services, Other Operating Revenue and Duty Drawback for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 10566.31 crore, down -1.45 % from last quarter Total Income of Rs 10721.59 crore and up 5.33 % from last year same quarter Total Income of Rs 10031.43 crore. The company has reported net profit after tax of Rs 1200.12 crore in the latest quarter.

The company's top management includes Dr.Pawan Munjal, Mr.Rajnish Kumar, Air M'shal (Retd.)B S Dhanoa, Ms.Camille Tang, Ms.Tina Trikha, Mr.Pradeep Dinodia, Mr.Suman Kant Munjal, Ms.Vasudha Dinodia, Mr.Vikram S Kasbekar, Prof.Jagmohan Singh Raju. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2024, the company has a total of 20 crore shares outstanding.

Investment Rationale
Axis Securities monitoring (1) Hero?s roadmap in the EV product portfolio, including investments in Ather, the ramp-up of VIDA V2, and the launch of the sub-Rs 1 Lc Vida V2 Lite catering to mass markets; (2) Strategy in the mid-weight MC segment amidst growing competition; (3) Expansion into new international markets. Additionally, government initiatives to enhance rural income, higher disposable income (as announced in the recent Union Budget), and the marriage season are expected to drive 2W industry growth, benefiting Hero, particularly in the entry and 125cc segments. Consequently, the brokerage estimates an 8%/9%/9% CAGR in Revenue/EBITDA/PAT over FY24-27E. Key risks are a) Macro Economic Uncertainty, b) Increased competition Intensity.

Promoter/FII Holdings
Promoters held 34.74 per cent stake in the company as of 31-Dec-2024, while FIIs owned 27.95 per cent, DIIs 18.04 per cent.