On Thursday, JPMorgan adjusted its outlook on shares of Hero MotoCorp Ltd. (HMCL:IN), increasing the price target to INR 5,320 up from INR 5,240. The firm has maintained an Overweight rating on the stock. This change comes in the wake of Hero MotoCorp's first-quarter financial results for the fiscal year 2025.
The revision was prompted by the latest earnings update, which indicated that the margin disappointment for the quarter was primarily due to ongoing investments in electric vehicles (EVs), impacting margins by 200 basis points.
Moreover, a seasonally weaker mix from the spare parts business contributed to the margin pressure. However, the internal combustion engine (ICE) margin stood at approximately 16%, which is at the higher end of the company's guidance range of 14-16%.
Hero MotoCorp has experienced robust growth and positive market share trends in the 125cc motorcycle segment. Despite this, the company's overall market share is facing challenges. This is attributed to weak demand in the entry-level segment and lower shares in both the scooter and premium segments.
As a result of these factors, JPMorgan has slightly reduced the average selling price (ASP) assumptions for Hero MotoCorp. Consequently, the firm's projections for the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) from fiscal years 2025 to 2027 have been lowered by 1-3%. The new price target is based on a roll-forward to September 2025 from the previous target set for June 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.