Hero Motocorp shares: This analyst at Angel Broking sets new target price; here is where it is heading

On Friday, trading in two-wheeler giant Hero Motocorp shares was negative. However, analysts have it that it can be a good opportunity for investors and that this stock is set to rise up to Rs 2,870-level. At around 1405 hours, Hero Motocorp was trading at Rs 2,623.95 per piece down by Rs 13.75 or 0.52%. The company has touched an intraday high and low of Rs 2,664 per piece and Rs 2,605.20 per piece respectively. Hero has continued to maintain its market leadership, as it posted sales of over 7.8 million vehicles in FY19. With 581,279 units sold in the month of March, Hero MotoCorp capped off FY’19 with sales of 7,820,745 motorcycle and scooter units during the 12-month period.  

Going forward, Sarabjit Kour Nangra, analyst at Angel Broking said, “Over FY2018-20E, the company will post a CAGR of 7.8% in sales terms. On net profit front, we expect the company to deliver a flattish performance during the period. The stock, has on the other hand witnessed, a strong de-rating and trades now at 3.7xFY2020E BV (including cash & Investments).”

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However, Nangra also added, “to protect a further de-rating the company has to exhibit all the characteristics of a leading player, which implies that its R&D efforts have to fructify, which should happen in next 4-5 years). In addition, company’s strong balance sheet and high ROE of business, enables higher dividend payout and should restrict the underperformance from here on, even for long-term buyers. Thus, we recommend a HOLD.”

Angel Broking has given a target price of Rs 2,870 per piece on Hero Motocorp, and if we compare current price then the two-wheeler maker will rise by 9% or Rs 242 ahead.