Hero MotoCorp vs TVS Motor: Which auto inventory do you have to purchase at this juncture? Specialists weigh in

Hero MotoCorp vs TVS Motor: November 2024 auto gross sales remained regular, regardless of the problem of a excessive festive base this yr, as your complete festive season occurred in October in comparison with being unfold throughout these two months in 2023.

Two-wheeler (2W) dispatches recorded a 3 per cent year-on-year (YoY) progress, primarily pushed by sturdy export gross sales, which surged 32 per cent YoY. In distinction, home dispatches remained flat. Key elements sustaining home demand embrace sturdy rural demand and the introduction of latest fashions throughout segments.

TVS Motor (TVSL) stood out as the highest performer in each home and export markets, sustaining its progress momentum. In distinction, Hero MotoCorp (HMCL) confronted a dip in dispatches attributable to ongoing stock correction, although underlying festive retail gross sales remained wholesome, registering a 12 per cent YoY progress.

Because the Indian two-wheeler trade gears up for future progress, traders face a crucial selection between two outstanding gamers—Hero MotoCorp and TVS Motor. Whereas each corporations maintain sturdy positions available in the market, let us take a look at share value traits, monetary efficiency, and knowledgeable suggestions within the present panorama.

Inventory Worth Development

TVS has outperformed Hero Moto in 2024 up to now. TVS has climbed 24 per cent on a year-to-date (YTD) foundation, whereas Hero Moto has gained round 13 per cent throughout the identical interval. Nonetheless, each corporations underperformed the Nifty Auto index, which rose over 27 per cent on this interval.

TVS has delivered optimistic returns in eight of the 12 months this yr, whereas Hero has gained in simply 5.

Over the previous yr as effectively, each auto shares delivered optimistic returns, with TVS rising 33 per cent and Hero Moto 24 per cent. As compared, Nifty Auto superior 33 per cent on this interval.

Boosted by sturdy market sentiment and investor confidence, TVS reached an all-time excessive of ₹2,958.15 in September 2024. At the moment, buying and selling at ₹2514.30, the inventory is 15 per cent beneath its peak. Nonetheless, it has surged over 34 per cent from its 52-week low of ₹1,873.05, recorded in April 2024.

In the meantime, Hero Moto additionally hit a file excessive of ₹6,245 in September. The inventory now trades at ₹4647.65, nearly 26 per cent away from its peak. That stated, the inventory has skilled an over 26 per cent rise from its 52-week low of ₹3,684.00, hit in December 2023.

During the last three years, TVS has delivered multibagger returns, surging 280 per cent as in opposition to a 92 per cent rise seen in Hero Moto.

Hero Moto vs TVS Motor: A Comparative Take a look at Q2FY25 Earnings

Hero MotoCorp, the world’s largest two-wheeler producer, reported a 14% year-on-year (YoY) rise in its web revenue for the quarter ended September 2024 at ₹1,204 crore. The corporate’s income in Q2FY25 grew 11% YoY to ₹10,463 crore. On the working degree, EBITDA elevated 14% YoY to ₹1,147 crore.

TVS Motor reported 23.5% progress in its standalone web revenue at ₹662.6 crore for the quarter ended September 2024. The identical stood at ₹536.5 crore within the year-ago interval. Its income from operations throughout the reporting quarter rose 13% year-on-year (YoY) to ₹9,228.2 crore.

Hero Moto vs TVS Motor: Which auto inventory do you have to choose?

As India’s two-wheeler trade navigates a dynamic part of progress and transformation, each corporations have demonstrated resilience and adaptableness in a aggressive market, however with shifting client preferences, increasing electrical automobile (EV) portfolios, and evolving rural-urban demand dynamics, the query arises: which inventory is healthier positioned for long-term progress? Let’s discover out.

Heet Chheda, Affiliate Alternative Broking prefers Hero Moto over TVS.

Hero MotoCorp is a long-term progress story led by optimistic momentum in each rural and concrete markets with rural restoration led by an excellent monsoon season. The corporate has a number of new product launches deliberate within the subsequent six months, together with ICE scooters, premium bikes, and EV fashions. Having seen an excellent response within the 125cc phase, notably for the not too long ago launched Xtreme 125R, the corporate has new premium merchandise lined up for increased CC variants beneath the Xtreme model.

Hero can also be increasing its Premia retailer community, which is devoted to promoting premium bikes together with plans to extend funding in model constructing and consciousness for its premium manufacturers. Hero strengthened its EV portfolio with the latest VIDA V2 sequence of electrical scooters and plans to broaden its EV portfolio to cowl a wider vary of value factors and buyer segments. Though TVS has a robust progress outlook, Hero MotoCorp presents higher valuation consolation making it a relatively enticing wager.

Nomura bullish on Hero Moto with purchase score however cautious on TVS with a impartial stance

The brokerage has a extra optimistic outlook for Hero MotoCorp, assigning a ‘Purchase’ score with a goal value of ₹5,805 per share. It highlighted rural demand enchancment as a key progress driver, notably as Hero derives 54 per cent of its gross sales from rural markets. Regardless of a difficult second quarter, Hero’s earnings progress remained wholesome, with additional margin enlargement anticipated because the drag from electrical autos (EVs) reduces by new fashions and Manufacturing Linked Incentive (PLI) advantages.

In distinction, Nomura has issued a ‘Impartial’ score on TVS Motor, citing considerations over slowing trade progress and margin stress. Whereas TVS is predicted to outperform the broader two-wheeler trade, elevated reductions are more likely to weigh on common promoting costs (ASPs), additional impacting profitability. Consequently, Nomura has lowered its EBITDA margin forecasts by round 50 foundation factors to 11.8 per cent for FY25 and 12.1 per cent for FY26. Moreover, the brokerage has revised its earnings per share (EPS) estimates downward by 7-8 per cent. Nonetheless, increased export progress could partially offset weak spot within the home market.

Anupam Roongta, Market Analyst, Share.Market additionally prefers Hero Moto over TVS.

In accordance with Issue Evaluation powered by Share.Market Analysis, each TVS Motors and Hero MotoCorp rating 5/5 on High quality and 4/5 on Low Volatility. Nonetheless, Hero MotoCorp scores higher on Worth whereas TVS Motors scores higher on Momentum and Sentiment. These insights could also be thought-about whereas selecting between the 2 shares for the long run.

Each Hero MotoCorp and TVS Motor are well-positioned within the two-wheeler market, however Hero’s various product portfolio, deal with premium segments, and rural market energy give it a aggressive edge. Coupled with beneficial valuation metrics and a bullish outlook from analysts, Hero MotoCorp seems to be the higher choose for traders in search of long-term positive factors, as per consultants.

Disclaimer: The views and proposals made above are these of particular person analysts or broking corporations, and never of Mint. We advise traders to test with licensed consultants earlier than taking any funding choices.