Hero MotoCorp shares hit Rs 3,000 after 2 years, stock up 17% in a month; what's next?
Shares of Hero MotoCorp climbed over 2 per cent on Thursday to 3,025.50, its new 52-week high as the stock has gained more than 17 per cent in the last one month.
- Jun 8, 2023,
- Updated Jun 8, 2023 10:54 AM IST
Shares of Hero MotoCorp were in the focus on Dalal Street on Thursday as the two-wheeler major extended its gain to hit the Rs 3,000 mark after more than two years. The last time it was seen above these levels was in March 2021 and it is among those exceptional counters, which are yet to witness its pre-Covid highs.
Shares of Hero MotoCorp climbed over 2 per cent on Thursday to 3,025.50, its new 52-week high. The stock has gained more than 17 per cent in the last one month, while it has surged about 35 per cent from its 52-week low at Rs 2,246.75 on March 28, 2023.
Hero MotoCorp reported sales of 519,470 units in May 2023, marking a growth of 7 per cent compared to 486,704 unit sales in May 2022. According to market analysts, recovery in the two-wheeler demand, nearing monsoon, inventory management, new launches, better product initiatives and reductions in EV subsidy are likely to support prices for Hero MotoCorp.
"A slowdown in the entry-level two-wheeler (2W) segment, lack of new product initiatives, and aggressive competition, especially in the 125-0cc segment has impacted its 2W market share by 350 bps over FY19-23. However, the company is making concerted efforts to change that," said JM Financial in its recent report with recovery in rural demand will be a key monitorable.
The rise in average 2W fleet age and gradual improvement in rural consumption is also expected to aid the demand. Reduction in FAME subsidy is expected to make EVs dearer, thereby temporarily lowering E2W penetration in the near term, possibly benefiting ICE 2W demand, the brokerage further said.
Its EBITDA margin recovered strongly during 4QFY23, led by positive operating leverage and softening commodity prices. We expect this recovery momentum to sustain. Below-normal inventory levels, new product launches, and softening commodity prices provide comfort, JM added with a 'buy' rating and a target price of Rs 3,200.
The country’s largest two-wheeler maker had reported a 37 per cent increase in net profit at Rs 859 crore for the fourth quarter that ended March 31, 2023, compared to a bottom line of Rs 627 crore in the year ago. The company's revenue from operations for the quarter stood at Rs 8,307 Crore against Rs 7,422 crore, reflecting a growth of 12 per cent.
In its report released about a month ago, Prabhudas Lilladher expected margins to improve in the near term from operating leverage, premiumisation, cost controls and stable commodity costs.
"Performance of new launches, an uptick in EV volumes, competition in core segments and recovery in rural markets would be the key monitorables for the company," the brokerage added, maintaining a buy call and a target price of Rs 3,200 on the stock.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
Shares of Hero MotoCorp were in the focus on Dalal Street on Thursday as the two-wheeler major extended its gain to hit the Rs 3,000 mark after more than two years. The last time it was seen above these levels was in March 2021 and it is among those exceptional counters, which are yet to witness its pre-Covid highs.
Shares of Hero MotoCorp climbed over 2 per cent on Thursday to 3,025.50, its new 52-week high. The stock has gained more than 17 per cent in the last one month, while it has surged about 35 per cent from its 52-week low at Rs 2,246.75 on March 28, 2023.
Hero MotoCorp reported sales of 519,470 units in May 2023, marking a growth of 7 per cent compared to 486,704 unit sales in May 2022. According to market analysts, recovery in the two-wheeler demand, nearing monsoon, inventory management, new launches, better product initiatives and reductions in EV subsidy are likely to support prices for Hero MotoCorp.
"A slowdown in the entry-level two-wheeler (2W) segment, lack of new product initiatives, and aggressive competition, especially in the 125-0cc segment has impacted its 2W market share by 350 bps over FY19-23. However, the company is making concerted efforts to change that," said JM Financial in its recent report with recovery in rural demand will be a key monitorable.
The rise in average 2W fleet age and gradual improvement in rural consumption is also expected to aid the demand. Reduction in FAME subsidy is expected to make EVs dearer, thereby temporarily lowering E2W penetration in the near term, possibly benefiting ICE 2W demand, the brokerage further said.
Its EBITDA margin recovered strongly during 4QFY23, led by positive operating leverage and softening commodity prices. We expect this recovery momentum to sustain. Below-normal inventory levels, new product launches, and softening commodity prices provide comfort, JM added with a 'buy' rating and a target price of Rs 3,200.
The country’s largest two-wheeler maker had reported a 37 per cent increase in net profit at Rs 859 crore for the fourth quarter that ended March 31, 2023, compared to a bottom line of Rs 627 crore in the year ago. The company's revenue from operations for the quarter stood at Rs 8,307 Crore against Rs 7,422 crore, reflecting a growth of 12 per cent.
In its report released about a month ago, Prabhudas Lilladher expected margins to improve in the near term from operating leverage, premiumisation, cost controls and stable commodity costs.
"Performance of new launches, an uptick in EV volumes, competition in core segments and recovery in rural markets would be the key monitorables for the company," the brokerage added, maintaining a buy call and a target price of Rs 3,200 on the stock.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)