Brokerage firms such as Jefferies, Nomura, Motilal Oswal, Emkay Global, and Nuvama Institutional Equities have reiterated their ‘Buy’ ratings on the stock, citing factors like rural demand recovery, upcoming launches, and margin improvements as key growth drivers.
Emkay has maintained its ‘Buy’ rating on Hero MotoCorp with a price target of ₹6,200. The price target implies a potential upside of 34% from Friday’s closing levels.
Emkay wrote in its note that Hero MotoCorp’s risk-reward remains attractive.
The brokerage said that Hero MotoCorp expects continued growth in the two-wheeler industry with outperformance seen amid returning rural demand, ramp-up in 125cc motorcycles, and upcoming product actions across segments (multiple launches across ICE and EVs over the next 6 months).
Near-term outlook is improving amid rural revival and ongoing festive season; however, Emkay has trimmed its FY25, FY26, and FY27 earnings per share estimates by 4%, 7%, and 6%, respectively, factoring-in gradual demand improvement on account of the generally moderating economic outlook.
Motilal Oswal said that Hero MotoCorp has seen a 13% volume growth in this festive period and expects this momentum to sustain on the back of the ongoing marriage season in November and improved rural sentiment.
However, the brokerage has reduced its FY25 EPS estimates by 1% and FY26 EPS estimates by a steeper 11%, citing lower volume growth expectations and moderated other income projections.
Despite the recent correction, the stock is attractively valued at 20 times and 18.5 times its FY25 and FY26 EPS estimates, respectively. Motilal has reiterated its ‘Buy’ rating on the stock, with a price target of ₹5,420 per share.
Global brokerage house Jefferies has maintained a ‘Buy’ rating on Hero MotoCorp but has lowered its price target to ₹5,500 per share.
According to Jefferies, the company’s Q2 results were in line with expectations, with EBITDA growth meeting estimates and EBITDA per vehicle reaching a record high.
The brokerage believes that India’s two-wheelers are poised for a strong double-digit growth over the next three years.
However, it highlighted concerns about Hero MotoCorp’s declining market share in the two-wheeler segment and unfavorable demand profile shifts. Success in premium motorcycles and electric vehicles (EVs) could act as a positive catalyst.
Separately, Nomura has also retained a ‘Buy’ rating on Hero MotoCorp, with a price target of ₹5,805 per share.
Nomura views rural demand recovery as a key growth driver.
The global brokerage firm noted that Q2 results were in line, supported by healthy earnings growth and attractive valuations, with room for margin improvement.
It expects the two-wheeler industry to grow by 10% over FY25-26, aided by a growth rebalancing and favorable monsoon conditions.
Early signs of rural demand recovery, which accounts for 54% of Hero MotoCorp’s sales, are encouraging.
Additionally, the brokerage believes margins could improve as the impact of EV-related drag reduces with new models and benefits from the PLI scheme.
Out of the 42 analysts that have coverage on Hero MotoCorp, 28 of them have a ‘Buy’ rating, while seven each have a ‘Sell’ and a ‘Hold’ rating.
Shares of Hero MotoCorp are trading 4.19% higher at ₹4,797.05. The stock has risen 17% so far in 2024.
