Hero MotoCorp's growth mileage: Rural recovery to power market share ride

To fuel its engine with rural focus, electric innovation, new product cycle

- RAM PRASAD SAHU

Hero MotoCorp, a major player in the two-wheeler market, has seen a 9 per cent rise in its stock since the beginning of the month. This increase, driven by the largest motorcycle company by volume, is attributed to expectations of a revival in rural sales due to normal monsoons, government measures to boost consumption, recent market share gains, and a large valuation discount compared to peers.

In the near term, the company's volume performance and growth trajectory, particularly in rural markets and entry-level segments, are expected to be key drivers.

Following 35 per cent year-on-year (Y-o-Y) volume growth in April, growth for Hero (and its peers) was subdued in May due to elections, resulting in a 4 per cent decline compared to the previous year. However, volumes for April and May combined are up 12.5 per cent.

Emkay Research believes that the government's potential focus on rural areas and improved affordability will act as catalysts for the stock.