Hero MotoCorp trades higher on nod to invest Rs 550 crore in Ather Energy

Shares of Hero MotoCorp (HMCL) edged up nearly 1 percent in early trade on September 5, as the world’s largest two-wheeler maker’s board of directors has cleared an investment of up to Rs 550 crore in the rights issue of associate company Ather Energy.

At 9:40am, the stock was trading 0.73 percent higher at Rs 2971.45 on the NSE.

Details of the board nod

The two-wheeler major stated in an exchange filing on September 4 that it has got the board’s approval to invest Rs 550 crore into electric two-wheeler maker Ather Energy, where it is an existing investor.

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The investment approval comes at a time when the EV maker was looking to close a funding round before floating its maiden public issue. Industry sources said that Ather Energy plans to go public by 2024.

“Profitability is key for us and we will only then look at an IPO. The market condition should also be right, and we will have to turn profitable to think about that. Our sales numbers are great, demand is growing, and we are very bullish on the segment we operate in,” Tarun Mehta, cofounder and chief executive officer of Ather had said in an interaction with Moneycontrol in January.

Also Read: Hero MotoCorp to invest Rs 550 crore into Ather Energy

In October 2022, Ather Energy raised $50 million in equity funding led by its existing investor Caladium Investment Pte Ltd with participation from Navam Capital-backed Herald Square Ventures. As per Industry sources, Ather was valued at $700 million during its last fundraise in October and was looking to raise another round which would have given a unicorn status to the EV firm. Founded in 2013 by Mehta and Swapnil Jain, Ather manufactures three electric scooters – the Ather 450X, the Ather 450 Plus and Ather 450S.

The EV firm has a manufacturing facility in Hosur in Tamil Nadu and launched a second facility in the same district recently. The Bengaluru-based firm is looking to take its annual capacity to nearly 15 lakh units from 4.2 lakh units. Ather Energy sold around 6,835 units in August, up 2 percent from 6,671 units a month back. The Bengaluru-based EV maker is looking to double its market share to about 30-40 percent over the next few years with the launch of its affordable 450S scooter in the 125cc category.

Brokerage Views

Brokerage firm JM Financial has given a ‘buy’ rating to the Hero Motocorp stock with a 12-month target price of Rs 3,700 per share, signifying a potential upside of 26.9 percent from the current market price in a report released on August 31.

“Product pipeline remains robust with more new launches over the next few quarters. In our view, HMCL is firming up its market position and seems to be making a strong comeback as an all-round two-wheeler player. The 2W replacement demand is overdue and an expected rural recovery in the second half of the year will drive volumes,” it said.

Stock Performance

The Hero MotoCorp stock has given a return of 18.96 percent over the last six months. The benchmark Nifty50 has given a return of 10.26 percent over the same duration.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.