The two-wheeler industry in India has witnessed remarkable growth, positioning the country as the largest producer globally, with 271 million registered two-wheelers as of 2023. Dominated by motorcycles and scooters, this sector accounts for over 75% of India’s total automotive production, reflecting its critical role in personal transportation and economic development.
With a market capitalization of Rs 1.18 lakh crore, the shares of Hero MotoCorp Ltd were trading at Rs 5,929 per share, decreasing around 3 percent as compared to the previous closing price of Rs 6,087.60 apiece.
Brokerage Target:-
UBS, one of the well-known brokerages globally, gave a ‘sell’ call on the auto stock with a target price of Rs 3,350, indicating a potential downside of 43 percent from Thursday’s price of Rs 5,929 per share.
Brokerage recommended:-
The brokerage noted that while wholesale volumes and festive optimism are creating a positive sentiment, these are masking the retail underperformance. Despite new product launches, the world’s largest two-wheeler company has seen a substantial loss in retail market share, with September 2024 figures falling below 24 percent.
The brokerage also observed that, while wholesale volumes and festive optimism are creating a positive sentiment, they are masking retail underperformance. Despite new product launches, the world’s largest two-wheeler manufacturer has seen a significant loss in retail market share, with September 2024 figures falling below 24%.
Moreover, the firm has told its shareholders that it will begin operations in Brazil during the fourth quarter of fiscal year 2025. The shipment to the Philippines has already begun in March 2024, according to the statement. In May, the business announced plans to establish a facility in Brazil to manufacture and distribute two-wheeler cars, parts, and accessories.
Financial Condition:-
Looking forward to the company’s financial performance, revenue zoomed by 15 percent from Rs 8,851 crore in Q1FY24 to Rs 10,211 crore in Q1FY25, but during the same period, net profit magnified by 47 percent from Rs 701 crore to Rs 1,032 crore.
Expansion plan to EV:-
Hero MotoCorp aims to considerably expand its electric car lineup. The firm plans to release two new low-cost EV models by the June quarter of FY25, which is projected to increase its market position in the expanding EV category. Furthermore, it has created agreements to construct an interoperable charging network, intending to deploy over 2,000 charging points in 200 cities.
Future Investment:-
Hero MotoCorp is strategically investing in its parts accessories and merchandise business, aiming to double its capacity from Rs 50 billion to Rs 100 billion by FY27. This initiative is anticipated to drive double-digit sales growth in this segment, aligning with the company’s broader goal of capitalizing on emerging opportunities, particularly in the premium motorcycle sector, while maintaining operational efficiencies.
Company snapshot:-
Hero MotoCorp Limited is engaged development, manufacturing, marketing, sale, and distribution of two-wheelers and their parts and accessories. Its product category includes motorcycles, scooters, and parts.
Written by:- Abhishek Singh
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