Dividend King Stock, 5000% Payout In 2023; Midcap Auto Stock Is An Attractive Bet; TP AT Rs 5,100

Brokerages are optimistic about Hero MotoCorp for its future roadmap. The company is bolstering its premium product portfolio with a series of new launches while strengthening its market position. Hero is among the dividend king stocks in the automobile segment. The company has a track record of paying huge dividends from its profitability. Brokerages have recommended buying and accumulating Hero MotoCorp shares for at least 15% potential gains in the near term.

On BSE, Hero MotoCorp shares are currently at Rs 4,445.25 apiece, with a market cap of Rs 88,854.84 crore. In six months, Hero MotoCorp has seen significant upside to the tune of 40%.

More upsides ahead in Hero MotoCorp!

Last week, Hero unveiled the highly anticipated second edition of Hero World at the state-of-the-art R&D hub of Hero, the Centre for Innovation and Technology (CIT) in the northern Indian city of Jaipur, India.

The company also announced its foray into the mid-weight category with the much anticipated Mavrick 440 motorcycle. With a rich legacy of delivering reliable and efficient motorcycles and scooters, the company is set to redefine the dynamics of the 400cc segment. With the Mavrick 440, a new technology flagship is blazing a trail for innovations, a perfect blend of dynamic design, and the signature reliability that Hero MotoCorp is renowned for.

Further, the ever-popular 125cc segment of Hero MotoCorp has been further invigorated with the launch of its newest offering, Hero Xtreme 125R. Combining the agility and versatility of an Xtreme model, crisply drawn lines, powerfully sculpted surfaces and dynamic proportions gives Xtreme 125R an athletic, commanding and imposing appearance. The new Xtreme 125R is available at Hero MotoCorp dealerships in two variants, priced at Rs. 95,000 for IBS and Rs. 99,500 for ABS.

Hero MotoCorp also appointed the diversified CG Motors as its distributor in Nepal.

In 2023, Hero MotoCorp paid up to a whopping 5000% dividend to the tune of Rs 100 per share. Its dividend is currently at 2.25%, among the highest in the auto sector.

What brokerages say about Hero MotoCorp?

In its research note, Prabhudas Lilladher said, "We increase our FY25-26E EPS estimates by 4%/8.5% to factor in volumes
from new launches and sustained rural recovery post Hero Motocorp's (HMCL) launch of Xtreme 125R and Mavrick 440 (pricing not revealed yet) at Hero World Day 2024. Xtreme 125R (filling white space in 125cc sports segment) should start meaningful contribution to volumes in FY25E."

PL's note added, "HMCL is undergoing an aggressive model launch cycle focused on addressing white space in existing segments and towards premium products. Including above two, HMCL has launched 5 new products in the last year and 3 new
engine families, which should start contributing meaningfully to volumes
from FY25 onwards."

The brokerage highlighted key focus in Hero MotoCorp are -- 1) winning in premium segment (from 125cc to 450cc); 2) building EV leadership (3 new product launch expected in FY25), 3) using digital mediums to expand reach and improve customer experience.

"We believe, HMCL is moving in the right direction and further re-rating is possible if premium segment volumes start becoming meaningful. Also with rural market seeing sharp recovery we see HMCL to be a key beneficiary from the trend (Rural trend reversal visible). The company trades at a PE of c19x on FY25E, more than c30% discount versus its peers' average. We rollforward to Mar-26 and maintain 'ACCUMULATE' rating with TP of Rs 4,800 at 18x PE Mar-26E standalone EPS (Rs 84 for Fincorp and Rs 115 for Ather)," PL's note added.

Further, JM Financial's note added, based on HMCL's roadmap, a product blitz is expected to continue across ICE and EV
segments over the next 18-24 month. Post these launches, HMCL's presence in addressable volume segments is expected to increase to c.96% (vs. c.80% last year). Near-term focus is on increasing production of recent launches and upgrading dealer outlets.

JM's note also said, "HMCL is strengthening its market position and seems to be making a strong comeback as an all-round 2W player. The stock has moved up ~43% in the last 2-3 months and we expect the rerating to continue basis its new premium launches and overall product portfolio revamp. HMCL remains our top pick in the 2W space."

Lastly, JM's note said, "We reiterate BUY with a Mar'25 TP of INR 5,150 (20x forward earnings)."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.