5,000% Dividend: Brokerages Recommend Buy On Hero MotoCorp; MAVRICK 440, Rs 100/Share Payout Lifts Stock

Two-wheeler giant Hero MotoCorp is recommended to buy for nearly 16% upside ahead. In the latest development, the auto player fixed the price for its flagship motorcycle- Mavrick 440 which can be booked from February 14 onward. Hero Moto's share price surged accordingly! The Dividend King stock is also in focus after its Q3 results.

On BSE, Hero MotoCorp's share price stood at Rs 4,813.20 apiece, up by 1.5% with a market cap of Rs 96,209.68 crore.

Hero MotoCorp MAVRICK 440:

In its filing today, Hero MotoCorp said that bookings for its flagship motorcycle - Mavrick 440 are open starting on, 14th of February 2024. Customers can book their motorcycles at specified Hero MotoCorp customer outlets as well as digitally.

Hero MotoCorp's MAVRICK will be available in three variants - Base, Mid and Top at Hero MotoCorp dealerships across the country at an attractive price point of Rs 199,000/- (Base), Rs 214,000/- (Mid) and Rs 224,000/- (Top) respectively.

Further, the company also launched a 'Welcome to Mavrick Club Offer' which will be available to customers who book the Mavrick 440 before 15th March. They will get a customised Mavrick Kit of Accessories & Merchandise worth Rs.10,000/-.

With a powerful engine - nimble and agile in traffic, yet supremely robust and comfortable for long tours - the Mavrick 440 opens up a whole new world of inspiring riding experience while commanding a muscular road presence with its distinctive, modern and youthful design and an all-metal body.

Hero MotoCorp Dividend:

Hero MotoCorp has announced an interim dividend of a whopping 5,000% aggregating to Rs 100 per share. This includes an interim dividend of 3,750% aggregating to Rs 75 per share and a special dividend of 1,250% amounting to Rs 25 per share for the financial year 2023-24, marking the centennial year of Chairman Emeritus Dr Brijmohan Lall Munjal.

Accordingly, the Board has fixed February 21, 2024, as the record date for determining the entitlement of members for payment of interim & special dividends. The payment of dividend/dispatch of dividend warrants will be completed by March 09, 2024.

Hero MotoCorp Earnings:

Overall, the company's Revenue from Operations for the quarter grew by 21%, and EBITDA margins at 14% improved by 250 bps over the corresponding quarter previous year, aided by commodity cost, leap savings, premiumisation and judicious price changes. Meanwhile, PAT for Q3 stands at Rs. 1,073 Crore, (vs Rs. 711 Crore, a corresponding quarter in the previous year) reflecting a growth of 51%. The consolidated Revenue and PAT for the quarter were Rs. 9,788 Crore and Rs. 1,091 Crore.

Hero Moto's focus on Parts Accessories & Merchandise (PAM) business has led to the business crossing annualised revenue of Rs. 5,000 Crore. To support growth in this business, the Company has planned for an expansion of its capacity with an outlay of Rs. 600 Crore.

Brokerages View On Hero MotoCorp:

Motilal Oswal Sets Rs 5,560 TP On Hero MotoCorp

We expect a recovery in domestic 2W demand to continue, led by stable demand in urban markets, better rural off-take, and a lower base than last year. New product launches in the growing 125cc segment and premium segment should augur well for HMCL. Moreover, stable RM prices and cost savings should drive a ~24% earnings CAGR over FY23-25E.

HMCL is a pure play in the domestic 2W industry, with a stronghold in the 100cc motorcycle segment. It has low vulnerability to EVs as it garners just 7% volumes from scooters and its core 100cc motorcycle is less prone to EVs. The stock currently trades at ~24.6x/20.7x FY24E/FY25E EPS. Retain BUY with a TP of INR5,560 (18x Mar'26E EPS + INR235/INR198 for Hero FinCorp/Ather after 20% holding company discount).

Prabhudas Lilladher Sets Rs 5,150 Target On Hero MotoCorp

We believe, HMCL is moving in the right direction and further re-rating is possible if the premium segment takes off. With the rural market rapidly recovering, HMCL stands to gain significantly from this trend. We expect margins to improve in the medium term from operating leverage, premiumisation, cost control, higher spares and stable commodity (we build in ~110bps increase over FY24-26E). Key monitorable will be 1) performance of new launches, 2) uptick in EV sales, 3) competition in core segment and 4) sustained recovery in rural markets.

We change our FY24-26E EPS by 4-7% to incorporate 3Q result and commentary; retain 'Accumulate' at TP of Rs 5,150 (at 18x on Mar-26E EPS, Rs 104 for Fincorp and Rs 115 for Ather).

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.