Hero MotoCorp Q4 Results Review - Inline Performance; Demand Outlook Positive: Motilal Oswal

Motilal Oswal Report

Hero MotoCorp Ltd. posted an in-line operating performance in Q4 FY24. Led by a favorable mix and cost savings, gross margins came in better at 33.6% (-20 basis points QoQ, our estimate 32.7%). However, higher other operating expenses, partially due to ~130bp negative impact of electric vehicle spending, led to in-line Ebitda margin of 14.3%, up 130bp YoY.

We expect a compound annual growth rate of ~13.5%/15%/17% in revenue/Ebitda/profit after tax over FY24- 26E. The stock currently trades at ~19.4 times/16.5 times FY25E/FY26E earnings per share. Reiterate our Buy rating on the stock with a target price of Rs 5,320 (18 times FY26E EPS + Rs 137/Rs 132 for Hero FinCorp/Ather after 20% holding company.

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