What should investors do with Hero MotoCorp stock post-Q4 results? Jefferies sees 26% upside potential

Hero MotoCorp share price, Hero MotoCorp target price, Hero MotoCorp Q4 FY24 Results: Shares of Hero MotoCorp remained in the spotlight on Thursday, May 9, a day after the New Delhi-headquartered auto firm's Q4 earnings report. The Hero MotoCorp stock rose as much as 6.66 per cent to the day's high of Rs 4,922 on NSE. The counter closed at Rs 4,761, up 3.19 per cent on NSE.

Hero MotoCorp Q4 FY24 Results: Splendor Plus motorcycle maker logs 18% growth in Q4 profit 

On Tuesday, Hero MotoCorp reported a standalone net profit of Rs 1,016.1 crore for the January-March period, up 18.3 per cent on a year-on-year (YoY) basis. 

The auto major, whose popular models include Splendor Plus, HF Deluxe, Passion Plus and Pleasure Plus, registered a 14.6 per cent growth in revenue to Rs 9,519.3 crore for the fourth quarter of FY24, according to a regulatory filing. 

The motorcycle maker's topline and bottomline were almost in line with analysts' expectations.

According to Zee Business research, Hero MotoCorp's March-quarter net profit was estimated at Rs 1,030 crore and revenue at Rs 9,370 crore.

Management Commentary

Hero MotoCorp's focus on product launches, network upgrades, and customer satisfaction drove it to new heights in FY24, said its Chief Executive Officer Niranjan Gupta. 

"From the highest number of product launches to the expansion of new format retail outlets and upgrade at super speed, to a digital‐first approach in premium, we set the building blocks in place for accelerated growth in the future. Our fiscal prudence and strategic actions ensured that our financial performance has been robust, resulting in highest ever annual revenue and Profits," said Gupta. 

“Moving forward, we expect the macroeconomic factors to aid the industry’s growth. With commodity prices remaining stable, expectations of normal monsoons, and government spending expected to increase, we see multiple tailwinds for the sector over the upcoming quarters,” the CEO added. Read more on Hero MotoCorp Q4 results

Hero MotoCorp target price: What should investors do with the Hero MotoCorp stock?

Jefferies and Citi have maintained a ‘buy’ call each on the Hero MotoCorp stock with a target of Rs 5,650 (upside potential of 26 per cent from the previous close) and Rs 5,500, respectively. The global brokerage highlighted the following points:

• Another good quarter, all-time high EBITDA/Vehicle
• 2-W poised for growth; Hero aspects 2-W poised for growth; Hero expects 2-W industry revenues to grow double digit in FY25
• Market share decline in 2-W and adverse demand  profile shifts are a concern
• See 17 per cent EPS CAGR over FY24-26E 

Meanwhile, CLSA and Macquarie have maintained an ‘outperform’ rating on Hero MotoCorp shares. While CLSA has raised the target to Rs 5,280, Macquarie has placed the target to Rs 5,557. CLSA stated the following key points in its note: 

• 4Q above estimates
• EBITDA margin for the petrol two-wheeler (2-W) segment stood at 15.6 per cent, while the EV business dragged the margin down by 130bp in 4QFY24.
• Management guides to double-digit revenue growth

JPMorgan has maintained an ‘overweight’ rating on Hero MotoCorp with a raised target of Rs 5,240 from Rs 5,180 earlier. Morgan Stanley, on the other side, has maintained an ‘underweight’ rating on the stock with a target of Rs 3,638.

Hero MotoCorp dividend

Hero MotoCorp announced a final dividend of Rs 40 per share. Read more on Hero MotoCorp dividend 

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