Shares of Hero MotoCorp, the leading two-wheeler manufacturer in India, have continued their upward trend for the third consecutive trading session. On Monday, the stock opened strongly at ₹2,385 per share, compared to its previous closing price of ₹2,347, and rose to an intraday high of ₹2,426, a surge of nearly 3.36%.
The rally in the stock came after the company announced in an exchange filing on April 1 that it sold 519,342 units in March 2023, marking a double-digit growth of 15% compared to the corresponding month in 2022, when it had sold 450,154 two-wheelers.
The company reported that domestic sales last month were at 5,02,730 units, a growth of 21% compared to 4,15,764 units in March 2022. However, the company's exports were lower at 16,612 units in March 2023, compared to 34,390 units in the year-ago month.
In the fiscal year 2022–23, Hero MotoCorp sold 53,28,546 units, a surge of 8% as against 49,44,150 units sold in 2021–22.
Domestic sales in FY23 stood at 51,55,793 units, compared to 46,43,526 units in FY22, an increase of 11%. The company reported lower exports at 1,72,753 units in FY23, compared to 3,00,624 units in FY22.
The company has recently entered the South-east Asian market through a partnership with Terrafirma Motors Corporation (TMC), a part of the Columbian Group of Companies, to launch its products in the Philippines.
After experiencing a continuous fall since the beginning of February, losing 17.52% of its value, the stock finally rebounded strongly on March 28, gaining 7.38% up until now.
In its result update report, domestic brokerage firm Anand Rathi has maintained its "buy" recommendation on the stock and increased the target price to ₹2,855 apiece.
The gross profit per vehicle has reached an all-time high of ₹19,800 in Q3FY23, which will increase the company's operating leverage and benefit from higher volumes in upcoming quarters. This was achieved through a combination of well-considered price increases and savings programs across the supply chain, according to the brokerage.
Anand Rathi highlighted that while some countries are still grappling with challenges, others are recovering steadily. Amid these global headwinds, India is relatively much better placed, with its key economic indicators showing positive trends.
The recently announced union budget further solidifies the platform with its focus on capital expenditure on the one hand and increasing disposable income on the other. This should help the auto sector, and the management expects double-digit revenue growth for the next fiscal year for the two-wheeler industry.
"Hero MotoCorp is on a path to market share recovery and backed by action on all fronts, including multiple product launches that are lined up in the coming quarters. We expect ourselves to grow ahead of the industry in FY24", said the brokerage.
40 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.