Emkay Global Financial has given Buy recommendation for Hero MotoCorp with a target price of Rs. 2940 in its research report issued on May 04, 2022

Emkay Global Financial’s report on Hero MotoCorp

Q4FY22 EBITDA declined by 32% yoy to Rs8.3bn, 14% below estimates, affected by higher other expenses due to the bunching up of CSR expenses and Vida brand launch costs. Revenue fell 15% to Rs74.2bn, in line with estimates. We expect a 12% volume CAGR in the domestic market over FY22-24E, supported by a pickup in rural demand and the opening of educational institutions/offices. In addition, exports are expected to see a 17% CAGR, owing to improved penetration in the Africa and Latin America regions. HMCL will aggressively focus on the EV space through own products (first launch by Jul’22), a joint development with Gogoro for a swappable battery model (launch by end of FY23) and investments in Ather Energy. It has set up an E-2W and battery assembly facility at its Andhra Pradesh plant.


Stock catalysts include a rebound in 2W demand and incremental announcements on the EV business. Retain Buy with a TP of Rs2,940 (Rs2,850 earlier), based on 15x core Jun’24E EPS (Mar’23E EPS earlier), net cash of Rs437/share and the value of investments at Rs119/share.

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