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Business News/ Markets / Stock Markets/  Hero MotoCorp share price jumps over 6% boosted by Q4 result; should you buy, sell, or hold? Here's what experts say
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Hero MotoCorp share price jumps over 6% boosted by Q4 result; should you buy, sell, or hold? Here's what experts say

Hero MotoCorp share price has surged nearly 80 per cent over the last year against a 64 per cent gain in the BSE Auto index and a 19 per cent gain in the equity benchmark Sensex in the same period.

Hero MotoCorp share price has surged nearly 80 per cent over the last year. (AP Photo/Andy Wong) (AP)Premium
Hero MotoCorp share price has surged nearly 80 per cent over the last year. (AP Photo/Andy Wong) (AP)

Hero MotoCorp share price: Shrugging off weak market sentiment, shares of Hero MotoCorp continued witnessing strong traction for the second consecutive session on Thursday, May 9, buoyed by the company's healthy March quarter (Q4) result. 

Hero MotoCorp share price opened at 4631.90 against its previous close of 4624.35 and soon rose 6.4 per cent to the level of 4,919.85 on the BSE. Around 10:15 am, Hero MotoCorp share price traded 5.59 per cent higher at 4,883 apiece. Equity benchmark Sensex was half a per cent down at 73,107 at that time.

Hero MotoCorp Q4 result

On Wednesday, May 8, Hero MotoCorp reported an 18 per cent year-on-year (YoY) increase in its standalone net profit at 1,016 crore versus 858.93 crore reported by the company in the year-ago period. Standalone revenue from operations for the quarter jumped 14 per cent to 9,519 crore from 8,306.78 crore reported in the corresponding quarter of the last financial year.

The company said 13.92 lakh units of motorcycles and scooters were sold in Q4FY24, compared to 12.70 lakh units in Q4FY23. The total units sold for the entire financial year 2024 reached 56.21 lakh, up from 53.29 lakh units in FY23.

The stock closed 3.3 per cent higher after the Q4 result announcement on Wednesday.

Also Read: Hero Motocorp Q4 results: Net profit up 18% to 1,016 crore; 40 per share dividend declared

Hero MotoCorp share price trend

Over the past year, Hero MotoCorp's share price has outperformed both its sectoral index, BSE Auto, and the broader equity benchmark, Sensex.

Shares of Hero MotoCorp have surged nearly 80 per cent over the last year against a 64 per cent gain in the BSE Auto index and a 19 per cent gain in the equity benchmark Sensex in the same period.

Hero MotoCorp share price hit its 52-week high of 4,979.95 on BSE on February 12 this year. The stock's 52-week low level is 2,572.15, which it hit on the BSE on May 10 last year.

Also Read: TVS Motor share price climbs nearly 6% after Q4 result; should you buy? Here's what experts say

What should Indian investors do?

Brokerage firms have mixed views about the stock after the Q4 result. Some pointed out that the company may benefit from rural recovery, while new launches will also help volume growth.

"Hero MotoCorp is a key beneficiary of the likely uptick in rural demand owing to its strong network. We forecast revenue and earnings CAGR of 11 per cent and 15 per cent, respectively, over FY24–26E with healthy FCF (nearly 3,900 crore per year) and dividend yield (nearly 4 per cent)," said Nuvama Wealth Management.

Nuvama has a buy call on the stock with a target price of 5,800, implying a 25 per cent upside potential.

Brokerage firm Motilal Oswal Financial Services has maintained a buy call on the stock with a target price of 5,320, implying a 15 per cent upside potential.

Motilal Oswal expects Hero MotoCorp to deliver a volume CAGR of 9 per cent over FY24-26E, led by new launches in 125cc, scooters and premium segments, and a ramp-up in exports.

HMCL will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments, Motilal said.

"We expect a CAGR of nearly 13.5 per cent, 15 per cent and 17 per cent in revenue, EBITDA and PAT, respectively, over FY24-26E. The stock currently trades at nearly 19.4 times and 16.5 times FY25E and FY26E EPS, respectively. We reiterate our buy rating on the stock with a target price of 5,320 (18 times FY26E EPS + 137/ 132 for Hero FinCorp/Ather after 20 per cent holding company discount)," said Motilal Oswal.

Also Read: Expert view: Unexpected election outcome could disrupt Indian stock market, says Trivesh D. of Tradejini

On the other hand, Kotak Institutional Equities has retained a sell call on the stock but revised the fair value to 3,950 from 3,675 earlier as it pointed out the company's market share gain would be limited.

"The company expects the demand for its new launches to pick up over the coming months driven by marketing efforts as well as expansion of premium dealerships. However, we believe market share gain would be limited for the company, given its weak brand positioning. In the EV scooter segment, the company lags behind its competitors," said Kotak.

Kotak expects the domestic two-wheeler industry to continue its momentum in FY25E, which will also aid Hero MotoCorp.

"We expect Xtreme 125 volumes to inch up; however, we do not expect a material uptick in volumes in most of its new premium motorcycle and scooter launches. Maintain sell rating with a revised fair value of 3,950 ( 3,675 earlier), driven by rollover and increase in value of subsidiaries," said Kotak.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.

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Published: 09 May 2024, 10:23 AM IST
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