Hero MotoCorp shares hit record high: What's the reason?
What's the story
Hero MotoCorp's stocks hit a new peak today, gaining 4% to ₹5,754 per share. The surge comes after the company reported a robust performance for the September quarter (Q2). Its consolidated net profit jumped 24% year-on-year to ₹1,321 crore while revenue increased 16% to ₹12,458 crore, the highest in any single quarter.
Financial growth
EBITDA margin and sales performance
Hero MotoCorp's EBITDA margin also improved by 55 basis points to 15% in the quarter, aided by volume growth. The company reported an 11% increase in motorcycle and scooter sales to 1.69 million units during the quarter. This was largely attributed to GST cuts on entry-level bikes and festive demand.
Market expansion
Hero MotoCorp's domestic and international sales
Of the total 1.69 million units sold, domestic sales accounted for 1.58 million units, an 8% year-on-year increase. International sales, boosted by market expansion into Europe, jumped a whopping 77% to 111,584 units. The company's realizations also improved by nearly 4% YoY due to a better mix and pricing strategies.
Investment outlook
Long-term guidance and broker ratings
Hero MotoCorp aims to outperform the industry in domestic and export markets, backed by new launches and expansion into new regions. The firm has maintained its long-term EBITDA margin guidance of 14-16%. Brokerages like JM Financial and Motilal Oswal have retained their 'Buy' rating on the stock with target prices of ₹6,650 and ₹6,500 respectively.