Buy Hero MotoCorp; target of Rs 6000: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Hero MotoCorp's scooter segment, including both ICE and EVs, is driving growth, with a substantial expansion in scooter capacity expected to support volumes.
  • The company's exports are expected to recover, with a focus on expanding presence in new geographies such as Brazil, Mexico, and Africa.
  • Improving unit economics of Vida, aided by a richer mix and cost-optimisation efforts, are expected to support margins despite inflationary headwinds.
  • Valuations remain supportive, with the stock trading at 18x Sep'28E EPS.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for:

  • Continued strong growth in scooter sales, particularly in the premium segment.
  • Successful expansion into new export markets, with a focus on Brazil, Mexico, and Africa.
  • Improving margins, driven by cost-optimisation efforts and a richer mix.
  • Progress on the Vida front, including increasing capacity and improving unit economics. If these signals are observed, it would suggest that the company's growth strategy is on track, and the investment thesis is playing out as expected.