IGI Logo

In Q2FY25, Hero MotoCorp reported an in-line performance on Revenue/EBIDTA/PAT front. Revenue for the quarter grew by 10.8% YoY to Rs.104.6bn. vs our estimates of Rs.101.9bn. The top line growth was attributed to recovery in the entry level and 125 CC segment. EBITDA for the quarter grew by 14.1% to Rs.15.16bn. vs est of Rs.14.88bn. Margin expanded by 43bps YoY/+10bps QoQ to 14.5%. EBIDTA/vehicle increased by 6.4% to Rs.9975/vehicle. RPAT for the quarter jumped by 14.2% YoY to Rs.12.04bn vs (est Rs.11.45bn).

* Hero MotoCorp’s growth strategy highlights its stronghold in the two-wheeler market, positioning it as a compelling long-term investment. The company achieved record festive sales of 1.6 million units, propelling a 16% revenue increase and lifting its market share to 31.6%, reflecting robust consumer trust. Sales momentum is expected to continue, driven by the wedding season, governmentspending, and a favorable monsoon.

* In the electric vehicle (EV) segment, Hero doubled sales to 5,000 units per month during the quarter, reaching festive EV sales of 11,600 units and capturing a 20% market share in five key cities. Planned launches in the premium motorcycle and scooter segments will further solidify Hero’s market position. Upcoming models include the Xpulse 210 with a liquid-cooled engine, the Xtreme 250R, and Xtreme R250 under the Karizma brand, as well as new ICE scooters like the redesigned Destiny and Xoom variants. Hero also plans to introduce new EV scooters by year-end.

* Investments in brand-building and customer experience, via the Hero 2.0 retail upgrade and the opening of 100 premium stores, are part of a larger strategy to enhance brand loyalty. These stores are expected to achieve sustainability within 12 to 18 months. The company's recognition in the Dow Jones Sustainability Index as the top-rated two-wheeler globally and fourth in the automotive sector underscores its commitment to ESG principles.

Outlook and Valuations: We expect HMCL to benefit from rural recovery on expectation of normal monsoon, rural recovery, traction in entry level bikes by new customers. Further as a long term strategy road map such as showroom revamp, upgradation of portfolio with new launches will support volume growth better than industry. We like to retain our positive view on HMCL due scaling up the EV portfolio and premium product portfolio; Harley, Mavrick, Karizma, XPulse and Xtreme. We recommend BUY rating on the stock with TP of Rs.5,314 (19x of Sep-FY27E EPS).

For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131