M&M vs Hero MotoCorp: Which auto stock should you bet on for long-term? Here’s a 5-point analysis | Stock Market News

M&M vs Hero MotoCorp: Leading Indian auto majors Mahindra & Mahindra (M&M) and Hero MotoCorp have received fresh reviews and upgrades from domestic brokerages after the conclusion of the July-September quarter results for fiscal 2024-25 (Q2FY25). While M&M’s new compelling electric vehicle ranges have made the stock an attractive buy, Hero Moto Corp has witnessed an uptrend on a strong quarterly performance despite external headwinds.

The auto sector’s Q2FY25 performance was shaped by varied trends across segments. Original equipment manufacturers (OEMs) reported muted topline growth due to sustained weakness in the Commercial Vehicle (CV), Passenger Vehicle (PV), and global luxury segments. Auto ancillaries, however, saw robust earnings growth during the September quarter, according to domestic brokerage firm Kotak Institutional Equities’ latest report.

Also Read: Hero MotoCorp vs Bajaj Auto: Which two-wheeler auto stock to buy after Q2 results?

Auto Sector Q2 Review

The brokerage said that the aggregate revenue of auto OEMs under its coverage universe was up two per cent in Q2FY25, driven by a double-digit YoY increase in 2W segment volumes, a richer product mix, and price hikes, which were partly offset by a nine per cent YoY decline in the CV sales volumes, a one per cent decline in PV sales volumes, and a 10 per cent YoY decline in the JLR business.

Tyre companies also struggled with margin pressures as rising rubber prices impacted their operating performance. Meanwhile, bearing companies had a mixed quarter, with margin challenges overshadowing revenue gains.

According to the brokerage, international and domestic natural rubber prices (spot) have corrected 25 per cent and 18 per cent, respectively, in the past month. Domestic tyre manufacturers abstained from procuring domestic rubber because domestic prices were trading at a premium to international rubber prices, leading to price adjustments in the domestic market.

It said tyre companies could benefit significantly, with a projected margin expansion of 200-250 bps, assuming no changes in pricing. Furthermore, the sharp yen depreciation against the Indian rupee is expected to reduce the cost of imported raw materials, aiding in margin expansion for Maruti Suzuki India from 2HFY25 onward.

M&M vs Hero MotorCorp: Which auto stock should you buy?

1.M&M vs Hero MotorCorp: Product pipeline

At compelling price points, M&M has launched two new electric SUVs, the BE 6e and the XEV 9e. Based on the INGLO platform, both models offer two battery pack options with a range of 535-682km for the BE 6e and 542-656km for the XEV 9e. Both models are expected to launch in January 2025, with deliveries in February. Both models boast 20-80 per cent charging in 20 minutes, use a 175kW charger, and offer a lifetime battery warranty (only to first-registered owners), an industry-first offering. 

Hero Moto Corp’s management highlighted plans for new product launches in H2FY25 and FY26, targeting both entry-level and premium segments, including models such as the Xpulse 210, Xtreme 250R, and Karizma XMR250, to expand the product portfolio. The management intends to broaden the EV model lineup across various price points over the next few quarters. As of September 2024, Hero had launched 58 Premia stores catering to premium customers. To drive higher customer engagement and premium positioning, Hero plans to reach 100 stores by FY25.