Hero MotoCorp Shares Up 4% Despite May Sales Dip

Hero MotoCorp Limited's shares climbed by 4% to ₹5,314 during early trading on June 3, even though the company experienced a drop in sales for May compared to the same month last year. Around 9:20 am IST, the shares were trading at ₹5,270, marking a 3% increase from the previous close on the NSE. Since the beginning of the year, Hero MotoCorp share price have appreciated by 24%.

In May, the well-known motorcycle and scooter manufacturer saw a 4% decline in sales, with a total of 4,98,123 units sold. This was a drop from the same period last year, during which the company had sold 5,19,474 units.

Specifically, domestic sales for the Splendor-maker saw a nearly 6% decline. In May, the company sold 4,79,450 units within the country, down from just over 5 lakh units sold in the same month the previous year, according to official data.

However, the company experienced a significant boost in exports, which jumped by over 67% in May. The export numbers for the month reached 18,673 units, up from 11,165 vehicles sold during the same period in the previous fiscal year.

The management is optimistic about increasing market share in FY25, driven by recent launches in the premium and 125 cc segments. "We anticipate accelerated growth in FY25 and are confident that the premium and 125 cc segments will gain market share," stated Hero MotoCorp's management during a post-results earnings call.

Hero MotoCorp anticipates strong performance from its new premium segment bikes, such as the Maverick 440, Harley Davidson X440, and Karizma. Furthermore, the 125 cc segment, which includes models like the Xtreme 125R, Splendor, and Glamour, is receiving an excellent response.

The buying interest came after as its associate company, Hero FinCorp, on Thursday, May 30, got approval from its board to undertake an initial public offering (IPO) route. "This is to inform you that the Board of Directors of Hero FinCorp Limited (“Hero FinCorp”), an associate company of Hero MotoCorp Limited (“Company”), at its meeting held today i.e. May 29, 2024, has provided its approval to undertake an initial public offering route (“IPO”)," the filing read.

The filing also stated that the IPO would proceed through a combination of a fresh issue and an offer for sale by certain existing and eligible shareholders. Additionally, the IPO will include a fresh issue of equity shares totaling up to ₹4000 crore.

"This is to inform you that the Board of Directors of the Company in their meeting held on May 29, 2024, has considered and approved the Initial Public Offering (IPO) of the equity shares of face value of ₹10 each comprising of a fresh issue of Equity Shares aggregating up to ₹40,000 million and an Offer for Sale of Equity Shares by certain existing and eligible shareholders of the Company," the regulatory filing read.

According to Zee Business research, the IPO could be launched with a valuation of ₹15,000 crore, with the book value expected to be 2.8 times FY23 on book value. In January 2022, the company had raised ₹2,000 crore at a valuation of ₹12,000 crore in the unlisted market.

Hero FinCorp, a subsidiary of Hero MotoCorp, is an Indian Non-Banking Financial Company (NBFC) specializing in both consumer finance and commercial lending. Its consumer finance division offers a wide range of services, including loans for Hero MotoCorp two-wheelers, Loyalty Customer Loans with top-up options for existing customers, and Loans against Property.