Why Hero MotoCorp Share Price is Rising

Since the beginning of 2022, the share price of Hero MotoCorp has been volatile.

The start of 2022 was good for the stock as it continued with the market momentum and gained till February 2022.

It fell drastically to its 52-week low the very next month in March 2022.

The share prices did not fall alarmingly low. However, the it did not rise dramatically either.

2021 was a difficult year for the investors of Hero MotoCorp. When share prices of most companies were on the rise, the share price of Hero MotoCorp underperformed and was a big laggard. The company's financial performance for past 3 to 5 years was lower than the industry average.

And since that fall, Hero MotoCorp has not been able to rise back to its level of January 2021.

Rising input prices, supply chain disruptions, and the Russia-Ukraine war kept the share price of Hero MotoCorp under water.

But the winds have been changing for the auto sector. Hero MotoCorp's share price has been improving for the past 3 months.

It is nearing its January 2021 highs.

On Friday last week, Hero MotoCorp's share price closed 6% higher at Rs 2,757.3..

So, what caused this jump? What suddenly changed for Hero MotoCorp?

Why Hero MotoCorp share price is rising

#1 The Price Hikes

Hero MotoCorp's share jumped over 6% on Friday after the company announced a 4% hike in price of its vehicles.

In an exchange filing on Thursday, the company said,

• "Hero MotoCorp will make an upward revision in the ex-showroom prices of its motorcycles and scooters, with effect from July 1, 2022. The price revision will be up to Rs 3000. The exact quantum of increase will be subject to the specific model and market".

This price hike will bring a much-needed increase in profit margins.

The company's financial performance was an indication of the upcoming price rise because the cost of inputs had increased significantly.

#2 Introduction of new products

In another filing by the company on 22 June, it said it will bring in Euro-5 compliant variants of its globally popular products in Turkiye.

Turkiye is an essential market for the development of Hero MotoCorp. Introducing these strong variants in Turkiye will put the company on a stronger footing in Turkiye.

The introduction of Euro 5 in Turkiye is expected to boost the sales of the company.

#3 Overall change in the auto sector

Recently, the auto stocks have been in the fast lane. The headwinds of the auto sector have turned into tailwinds.

The fall in commodity prices like crude oil and steel combined with supply chain resolution has pushed up auto stocks.

The auto sector is on the brink of a revolution. The whole scenario of EV Sector and their development opportunities will push the auto sector into a green wave.

Hence unsurprisingly, the new changes has sent waves of positivity in the markets, and the share price of Hero MotoCorp is rallying.

Equitymaster's view on the auto sector...

It looks like the auto sector was one step ahead of the market.

When the markets were rising speedily, the auto sector was in a correction mode, and now when the broader markets are correcting, the auto stocks have already bottomed out.

Aditya Vora, Research Analyst at Equitymaster has this to say when it comes to the Indian auto sector:

• "Auto firms will no longer be only assembling companies but will transform into technology companies.
  
  As they say, catch them young.
  
  Companies like the one above which are at the forefront of technological change should be bought in this downcycle.
  
  When the cycle turns up, which in my view has already happened, these auto and auto ancillary companies will be huge wealth creators.
  
  It's time to buy them."

You can read Aditya's entire editorial here: Auto Stocks are in the Fast Lane. Is it Time to Buy?

Hence, it seems like the momentum in auto stocks is here to stay and auto companies will be on the rise.

About Hero MotoCorp

Hero MotoCorp Limited, formerly Hero Honda, is an Indian multinational motorcycle and scooter manufacturer based in New Delhi, India.

The company is the largest two-wheeler manufacturer in the world. In India it has a market share of about 46% in the two-wheeler category.

Hero MotoCorp has five manufacturing facilities based at Dharuhera, Gurugram, Neemrana, Haridwar, and Halol in the green field stage.

For more details about the company, you can have a look at Hero MotoCorp's factsheet and Hero MotoCorp's quarterly results on our website.

You can also compare Hero MotoCorp with its peers.

Hero MotoCorp vs Bajaj Auto

Hero MotoCorp vs Mahindra & Mahindra

Hero MotoCorp vs Maruti Suzuki

Hero MotoCorp vs Atul Auto

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...