Hero MotoCorp under pressure after Q3 results; what should investors do?

Hero MotoCorp shares remained under pressure on Wednedsay, a day after the auto maker reported its quarterly numbers.

Hero Moto's share price has reported negative growth of over 2 per cent in the last one year - Image Source: Reuters

Hero MotoCorp shares succumbed to selling pressure on Wednesday, a day after reporting the auto maker reported its financial results for the quarter ended December 2022. The Hero MotoCorp stock dropped by as much as Rs 53 or two per cent to Rs 2,594.6 apiece on BSE.

What brokerages recommend on Hero MotoCorp after the auto maker's Q3 results

The two-wheeler company’s inability to gain traction in scooter and premium motorcycle segments remains a concern, according to Kotak Institutional Equities, which maintained a ‘reduce’ rating on the stock with a target price of Rs 2,600 apiece after the earnings announcement.

Brokerage	Rating	Target price
Morgan Stanley	Underweight	Rs 2,289
Jefferies	Buy	Rs 3,200
Citi	Buy	Rs 3,300

The slump in the stock can be attributed to weakness on the margin front, according to analysts at Kotak Institutional Equities.

Hero MotoCorp Q3 results

The two-wheeler major reported a nearly four per cent year-on-year rise in net profit to Rs 711.1 crore for the quarter ended December 2022 and growth of two per cent in revenue to Rs 8,031 crore.

According to Zee Business research, the company's quarterly profit was estimated at Rs 657 crore and revenue at Rs 7,950 crore.

Hero MotoCorp anagement Commentary

Hero MotoCorp Chief Financial Officer Niranjan Gupta said: “We have started recovering our market shares and expect this journey to continue backed by exciting launches lined up over the next few quarters, especially in the premium segment. This, coupled with our renewed focus on a savings programme, should also help in improving our margin profile going forward.”

"Our R&D teams are working on accelerated portfolio expansion as well, in the EV space," Gupta said. The company plans to roll out its newly launched electric vehicle Vida across multiple cities in FY24, he added.