Hero Motocorp, India’s leading manufacturer of motorcycles and scooters, witnessed a surge in its stock price on March 2, as investors cheered a robust 19% year-on-year increase in its February sales.
The company’s shares jumped by 1.56%, reaching Rs 4,577.45, following the announcement of its strong sales performance for the month. Hero Motocorp reported sales of 468,410 units in February 2024, marking a significant growth compared to the 394,460 units sold in the same period last year.
Buoyed by this positive momentum, Hero Motocorp revealed plans to ramp up production volumes of its Harley-Davidson X440 and Mavrick 440 models, with the first phase expected to be completed by the middle of this year.
The company’s exports also saw a substantial uptick, nearly doubling from 12,143 units in February 2023 to 23,153 units in the same month this year.
In line with its commitment to expanding its presence in the electric vehicle (EV) segment, Hero Motocorp announced the launch of the Vida V1 model and outlined plans to introduce four additional scooters throughout the fiscal year 2024-25. The company remains focused on enhancing the EV charging infrastructure in collaboration with Ather.
While Hero Motocorp’s stock has witnessed an impressive gain of over 85% in the past year, it experienced a slight decline of over 3% in the last month.
Financially, the New Delhi-based two-wheeler manufacturer reported a significant 51% year-on-year increase in standalone net profit to Rs 1,073.38 crore for the quarter ended December 31, 2023. This surge in profit was attributed to factors such as easing input costs, operative leverage, higher average selling prices, price hikes, and increased volumes.
The company’s turnover for the third quarter of the fiscal year also witnessed robust growth, expanding by 21% to Rs 9,723.73 crore compared to Rs 8,030.98 crore in Q3FY23. Despite this growth, the quarter’s margin slightly dipped to 14% due to higher promotional spending.
In terms of analyst outlook, Nuvama forecasts a revenue/earnings compound annual growth rate (CAGR) of 10%/23% over FY23–26E, with healthy free cash flow (Rs 38 billion per year) and a dividend yield of approximately 3%. The brokerage maintains a “buy” rating on the stock and raised the target price to Rs 5,600 from Rs 5,000.
On the other hand, HDFC Securities remains cautious about Hero Motocorp’s recovery prospects despite its robust product pipeline. The domestic brokerage maintains a “reduce” call on the stock but has revised the target price upward to Rs 3,535 from Rs 2,844, considering March 2026 earnings.
