India’s two-wheeler market, dominated by companies like Bajaj Auto, Hero MotoCorp, and TVS Motors, is a critical segment of the automotive industry. These manufacturers cater to both domestic and international markets, offering affordable, fuel-efficient, and reliable mobility solutions. With rising environmental concerns and government incentives, the industry is undergoing a transformative shift toward electric vehicles (EVs).
Companies are investing heavily in EVs, with Hero MotoCorp introducing its Vida EV brand and Bajaj Auto reviving the Chetak as an electric scooter. These efforts align with India’s push for sustainability and its vision for a greener future. With a growing charging infrastructure and increasing consumer acceptance, the EV segment in two-wheelers holds immense potential for rapid growth.
Share price
The shares of HeroMoto Corporation Limited is trading at Rs. 4,762 down by 0.6% from its previous close of 4,767.8.
Recent Sell-Off
The shares of Hero Moto Corporation Limited saw a sharp sell-off from the high of Rs. 6,246 to Rs. 4,467. The primary reason for the fall in the share price was because of sharp profit booking due to fear of global uncertainty.
Brokerage Target By ShareKhan
Sharekhan is bullish on the stock with a target price of Rs 6,057, citing strong margin expansion and robust performance in its internal combustion (IC) business. The brokerage highlighted that the underlying IC business saw a 150-bps year-on-year EBITDA margin expansion to 16.5%, driving a sharp improvement in gross margins.
Management’s confidence in maintaining blended EBITDA margins at 14-16% further supports the positive outlook.
Sharekhan retained a BUY rating, emphasizing the company’s focus on premiumization, successful new product launches, and growth in the electric vehicle (EV) market. The stock’s valuation at a P/E of 16.8x/15.3x and EV/EBITDA of 11.1x/10.1x on FY26E/FY27E estimates reflects strong growth potential and attractive investment opportunities.
Financial Outlook
In Q2FY25, the net profit after tax (PAT) grew 14.2 percent year-on-year (Y-o-Y) to Rs 1,203.5 crore, as opposed to Rs 1,054 crore in the same quarter a year ago (Q2FY24). The two-wheeler maker’s revenue from operations soared 11 percent Y-o-Y to Rs 10,463.2 crore, as against Rs 9,445 crore in Q2FY24.
At the operating level, earnings before interest, tax, depreciation, and amortization (EBITDA) rose 14.1 percent annually to Rs 1,515.9 crore during the quarter under review, as opposed to Rs 1,328 crore in Q2FY25. Consequently, EBITDA margin expanded 40 basis points (bps) to 14.5 percent in the September quarter of FY25, from 14.1 percent a year ago.
Management Commentary
Niranjan Gupta, chief executive officer (CEO) of Hero MotoCorp said, “We are also planning a slew of launches in the scooter segment, covering both ICE and EV. We will have 3 models coming in ICE scooters by March 2025, containing many first-in-class and best-in-class features. Our VIDA market shares continue to move up, and we will be expanding the portfolio to cover all price segments soon.”
Targets Given By Different Brokers
ShareKhan: has given a target of Rs. 6,075 which is a 27% upside from the CMP
Nuvama: has given a target price of Rs. 6200 which is a 30% upside from the CMP
Trade Brains: has given a target of Rs. 6,700 implying an upside potential of 40%
Written By: Dipangshu Kundu
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