HeroMoto Corp has declared a final dividend of Rs 165 per share, which translates into a payout ratio of 72%. Management expects the two-wheelerindustry to post 6-7% YoY growth in FY26, largely similar to FY25. Management also expects to outperform industry growth in FY26, backed by its upcoming new launches.
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Motilal Oswal Report
Hero MotoCorp Ltd.'s Q4 FY25 margins remained stable YoY and were also in line with our estimates. Reported Ebitda margin came in at 14.2%, while ICE margins stood at 16.1%, adjusted for the Rs 1.43 billion loss in EV business.
We expect Hero MotoCorp to deliver a volume CAGR of ~5% over FY25-27, driven by new launches and a ramp-up in exports. Hero MotoCorp will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments. The stock looks attractive at ~16.6x/15.3x FY26E/27E EPS.
We reiterate Buy with a target price of Rs 4,761 (17x FY27E EPS + Rs 110/Rs 140 for Hero FinCorp/ Ather post 20% Holdco discount).
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