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Motilal Oswal Report
Brokerage firm Motilal Oswal has reiterated its ‘Buy' rating on Hero MotoCorp Ltd., setting a target price of Rs 6,205, implying an upside of around 18% from current levels. The brokerage remains positive on the two‑wheeler major, citing healthy demand trends, improving market share in scooters and motorcycles, and a sharp recovery in exports, even as rising input costs pose near‑term margin risks.
Following an interaction with the company's management, Motilal Oswal noted that retail demand remained strong in the March quarter, with retail sales outpacing production. This helped Hero MotoCorp reduce dealer inventory levels to about five weeks by the end of March, signalling steady underlying demand across segments.
Demand remains healthy in 4Q with a positive outlook ahead
In the domestic motorcycle segment, Hero MotoCorp has seen a pickup in demand for its entry‑level and commuter models, supported by a recovery in rural markets and the impact of GST rate cuts. The brokerage highlighted a sharp improvement in sales of Splendor, which witnessed a notable rise in demand post the tax changes.
The company has also regained some lost market share in the 125cc segment, aided by the relaunch of Glamour and the launch of the upgraded Xtreme 125R, which features dual‑channel ABS — a segment‑first offering. According to management, these launches have started delivering results, with further gains expected as the models are rolled out pan‑India and supported by focused marketing campaigns.
On the scooter front, Hero MotoCorp has delivered a strong outperformance versus the broader industry. While the industry posted mid‑teens growth during the year so far, the company reported significantly higher growth, led by new launches and refreshes in its Destini and Xoom portfolios. Premium scooters now account for over half of scooter volumes, and capacity expansion is underway to support future growth.
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