Hero MotoCorp shares end 5 of last 6 months in the red, down 43% from peak. What should investors do? | Stock Market News

Shares of Hero MotoCorp, one of the world’s largest two-wheeler manufacturers, ended Tuesday’s session, March 18, higher, gaining 2% to ₹3,564 apiece, which came as a relief for investors after the stock finished the last four trading days in the red.

However, despite today’s pullback, the Nifty auto stock trades at multi-month lows. In the previous trading session, the stock touched a 15-month low of ₹3,461 apiece. From its peak of ₹6,246 apiece, it is now down 43%, making it one of the worst performers in the Nifty 50 index.

What is weighing on Hero Moto stock price?

Concerns over a slowdown in two-wheeler (2W) sales, a drop in market share, rising competition in the 2W and premium segment, and weak demand for entry-level motorcycles are currently impacting the stock price of Hero MotoCorp, causing it to end five out of the last six months (including the current month) in the red.

Once a dominant force in the Indian two-wheeler industry, the company is now seeing a decline in market share. According to the latest reports, its rival Honda is making significant progress in closing the market share gap with Hero MotoCorp.

The Indian unit of the Japanese auto giant, which recently stated that it is within reach of becoming the market leader in India, dispatched 3.84 lakh two-wheelers (down 7.26% YoY) in the domestic market in February, while Hero MotoCorp dispatched 3.57 lakh units (down 19.8% YoY).

Hero MotoCorp’s domestic dispatches from April to February stood at 51.02 lakh units, while Honda’s domestic market dispatches totalled 49.25 lakh units. The gap between Hero MotoCorp and Honda now stands at 1.77 lakh units in the current financial year, significantly down from 8.90 lakh units in the year-ago period.

The significant rise in Honda’s sales has improved its domestic market share to 24.27% at the end of February, up from 23.82% in February 2023, while Hero MotoCorp has lost nearly 5% of its market share, dropping to 28.52%, according to FADA data.

Meanwhile, 2W sales in rural India continue to outperform urban India, as sales in urban areas have jumped 7% in the current fiscal year, while rural sales grew by 9.09%, FADA data showed.

Amid a shift in consumer buying patterns, the company has shifted its focus more towards premium motorcycles from its traditionally strong entry-level motorcycle segment to expanding its presence in the premium motorcycle market.

The company is facing tough competition in the premium and EV segments, with Bajaj Auto leading in the EV space, as per the February sales data. 

Analysts remain positive on Hero Moto shares

Domestic brokerage firms remain confident in the company’s growth revival, driven by its 2030 strategy, which is built on four key growth pillars: strengthening its core business, excelling in the premium segment, leading in electric vehicles (EVs), and diversifying revenue streams.

Anchored by the 4S mantra—speed, scale, synergy, and simplification—the strategy also emphasizes creating a future-ready organization and advancing environmental, social, and governance (ESG) initiatives.

Analysts believe that product launches in premium scooters and EVs will drive growth, with new models planned for Q4FY25 and FY26. Domestic brokerage firm Axis Securities noted that Hero MotoCorp has also enhanced its premium offerings, supported by a strong framework for scaling up its premium business.

Additionally, its global business is rapidly expanding, while parts, accessories, and merchandise segments have delivered record revenue, underscoring the company’s continued growth potential.

The brokerage has a ‘buy’ call on the stock with a target price of ₹5285 apiece on the stock.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.