Broker’s call: Hero MotoCorp Buy

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Target: ₹6,015

CMP: ₹5,125.80

With the launch of differentiated products in FY24, Hero MotoCorp has been successful in building a strong motorcycle product portfolio. In FY25, the company plans to launch both ICE and EV models in the scooter space, as newer models in the premium motorcycle segment. The company has a clear strategy to win market share in the premium category of 2W, grow the EV business, expand Premia stores (100+ stores targeted in FY25), upgrade existing stores to Hero 2.0 (500+ by Q1) and invest in marketing (via both traditional and digital routes).

We monitor Hero’s roadmap in the EV product portfolio – investments in Ather, ramp up of VIDA, launch of new affordable product range; strategy in the mid-weight MC segment (Karizma, HarleyX440, Mavrick440) amidst the landscape of increasing competition; expansion into new international geographies. Actual volume growth across key segments will be the key monitors.

Normal monsoons, a government push to improve rural income, and the festive season are expected to foster 2W industry growth and benefit Hero specifically in the entry and 125cc segments. Consequently, an 8/9/9 per cent CAGR in Revenue/EBITDA/PAT over FY24-27 is projected.

The stock is currently valued at 23x core FY26 EPS (previously 21x), Ather Energy at 1.5x and Hero FinCorp at 1.5x FY24 P/B, resulting in a TP of ₹6,015/share (up from ₹5,530/share).