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Hero MotoCorp share gains ground despite muted Q1; what's next?
Around 10:00 AM, Hero MotoCorp share was trading 1.46 per cent higher at ₹4,540, even as the BSE Sensex slipped 0.29 per cent to 80,306.90.
Q1 results: Muted but steady
Hero MotoCorp reported a muted performance for the first quarter, with its standalone net profit rising marginally by 0.3 per cent year-on-year (Y-o-Y) to ₹1,126 crore from ₹1,123 crore. Revenue declined 5.6 per cent to ₹9,579 crore compared to ₹10,144 crore in the same period last year. Ebitda also slipped 5.3 per cent Y-o-Y to ₹1,382 crore from ₹1,460 crore, while Ebitda margin remained flat at 14.4 per cent. Total sales volume stood at 13.67 lakh units for the quarter.
Despite the muted headline numbers, the company continued to strengthen its product positioning. In scooters, the Destini 125 and Xoom 125 led the charge, while the HF Deluxe Pro expanded offerings in the 100cc segment. Its electric vehicle (EV) business under the VIDA brand maintained momentum, and international operations outpaced industry trends.
Hero expects demand to remain healthy ahead of the festive season, backed by a robust product pipeline and steady retail demand, as seen in higher VAHAN registrations.
'Our profitability and margins remained resilient, supported by strong demand for our entry & deluxe motorcycles and scooters,' said Vivek Anand, CFO, adding that global and EV segments continued to show promising traction.
Brokerage view: Cautious tone
Jefferies reportedly retained its 'Underperform' rating on the stock with a target price of ₹3,330, noting that Q1 was weak but broadly in line with expectations. The flat profit was supported by higher other income, while the EV business showed encouraging signs.
Technical view: Bullish breakout in play
According to Sudeep Shah, vice president of technical research at SBI Securities, Hero MotoCorp has broken out of a key resistance zone between ₹4,460 and ₹4,490 on August 4. After some initial profit booking, the stock bounced back, with the resistance now acting as support.
'The RSI is tad above the 60 mark while the ADX, a key trend strength indicator, has been on the rising mode, which further reinforces the bullish view on the stock. The stock needs to hold and close above the ₹4,460 level. Follow up from the current level can lead to price moving towards ₹4,600 followed by ₹4,650 in the short term,' Shah added.
Meanwhile, Ravi Singh, senior vice president of retail research at Religare Broking echoed the positive sentiment. He noted that Hero had been consolidating between ₹4,200 and ₹4,500 for two months and is now showing strength above the ₹4,500 level. A breakout of an inverse head-and-shoulders pattern also suggests bullish momentum.
Singh advises buying at current levels with a stop loss at ₹4,200 and a potential upside target of ₹5,000-₹5,200.
While Hero's Q1 numbers lacked fireworks, the stock's technical setup and the company's strong presence across segments, including EVs, may continue to support investor interest. Analysts remain divided as some see upside ahead, while others remain cautious on valuations.
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