Accumulate Hero MotoCorp; target of Rs 5850: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Cost savings and premiumization: HMCL's margins are expected to improve due to cost savings from its LEAP program and premiumization of its products, which should contribute to revenue growth.
  • Operating leverage: The company's operating leverage is expected to improve due to increased capacity utilization and expansion of its premium segment.
  • Electric vehicle (EV) growth: HMCL's EV segment, VIDA, has turned gross margin positive and is expected to continue growing, driven by increasing demand and improving unit economics.
  • Market share expansion: HMCL is focused on expanding its market share in the two-wheeler industry, particularly in the premium segment, through new product launches and strategic investments.

Thesis Validation Checklist

  • Margin expansion: Watch for HMCL's margins to expand due to cost savings and premiumization, which should contribute to revenue growth.
  • EV growth: Monitor VIDA's growth and improving unit economics, which should drive HMCL's EV revenue.
  • Market share gains: Track HMCL's market share expansion in the two-wheeler industry, particularly in the premium segment.
  • Capacity utilization: Monitor HMCL's capacity utilization and expansion plans, which should drive operating leverage and revenue growth.