Why are Hero MotoCorp shares rising today?

Shares of Hero MotoCorp climbed nearly 4 per cent in Monday's trade after the two-wheeler maker said it will raise the prices of its scooters and motorcycles by up to Rs 1,500 per unit, with effect from December 1, in a bid to offset inflationary pressure. The exact quantum of the hike will vary by specific models and markets, it said.

The scrip also gained ahead of November auto sales data. Hero MotoCorp is seen reporting a double-digit rise in volume growth.

In a filing to BSE post market hours of Friday, Hero MotoCorp said it will make an upward revision in the ex-showroom prices of its motorcycles and scooters, effective from December 1.

Following the development, the scrip rose 3.59 per cent to hit a high of Rs 2,804.35 on BSE. The scrip is up 11.56 per cen so far this calendar compared with a 5.4 per cent rise in the BSE Sensex during the same period. The average target price on the stock, as per publicly available Trendlyne data, at Rs 3,037.31 suggests a 9.7 per cent potential upside for the stock.

Chief Financial Officer (CFO) Niranjan Gupta said the upward revision of the prices of motorcycles and scooters has been necessitated due to overall inflationary costs.

"We will continue to provide innovative financing solutions in order to cushion the impact on the customers. We have also put in place accelerated savings programs, which will help us to offset any further cost impact, and drive improvement in margins. Moving forward the economic indicators are favourable to a growth in demand, and we expect industry volumes to pick up in coming quarters,” Gupta said.

There are also hopes that Hero MotoCorp will report healthy volume growth for November.

As per Emkay Global, the volumes for the two-wheeler industry is expected to improve 10 per cent YoY.

"Our channel checks indicate that urban demand is better than rural and scooters are doing well in comparison to motorcycles. We expect domestic volumes to improve 41 per cent YoY for Eicher Motor-Royal Enfield, 12 per cent for TVS Motor, 11 per cent for Hero Moto Corp, and 10 per cent for Bajaj Auto. Eicher Motor-Royal Enfield remains an outperformer on account of large pending order book for Hunter motorcycle," it said.

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