Shares of Hero MotoCorp fell 5.7% to Rs 4,627.55 but the brokerages stand bullish on the stock with a “Buy” recommendation.
The brokerage firm Motilal Oswal has maintained the rating on the stock of Hero MotoCorp to “Buy”. It has a target price of Rs 5,560, a 13% upside from the current market price of Rs 4,909 as the brokerage believes that the demand for domestic two-wheelers will recover, which will be “lead by stable demand in urban markets, better rural off-take, and a lower base of last year.”
The brokerage house said that the company’s new launches in the 125 cc and premium segment will play in its favour.
According to Motilal, the EVs will not hinder the company much as it only gains 7% volume from scooters. The major play of the company is in 100 cc bikes, which is unlikely to be affected by the EVs. The company will also be benefiting from stable raw material prices and cost savings, which will grow its earnings by 24% over FY23 – 25.
Another broking firm JM Financial has also maintained the “Buy” on the stock of Hero MotoCorp. It has a target price of Rs 5,400. The brokerage house expects the company’s earnings per share to grow by 23% over FY 23 – 26.
JM Financial believes that the company is about to recover market share as the company launches a new product cycle. Also, the company will get support from the rural market recovery, which will help it report 8% volume over FY 23 – 26. In the third quarter of the current financial year, the company reported an 18% year-on-year gain in its volumes.