Buy Hero MotoCorp shares with target price of Rs 3100-Rs 3200, says expert
Sharekhan says that Hero MotoCorp commands 65% market share in the combined economy and executive motorcycle segment, which together makes up 80% of the motorcycle market in India. Hero has strong reach in semi-urban and rural areas, aided by its largest distribution network in the 2W industry. Sharekhan says it expects Hero MotoCorp to be the beneficiary of rural demand and the increased need for personal mobility in a post COVID-19 scenario
Hero MotoCorp share price today is Rs 2890, down Rs 66 or 2.25%. Hero MotoCorp share price has fallen nearly 2% from Rs 2942 to Rs 2890 over last week. Sharekhan says that Hero MotoCorp commands 65% market share in the combined economy and executive motorcycle segment, which together makes up 80% of the motorcycle market in India. Hero has strong reach in semi-urban and rural areas, aided by its largest distribution network in the 2W industry. Sharekhan says it expects Hero MotoCorp to be the beneficiary of rural demand and the increased need for personal mobility in a post COVID-19 scenario. Hero’s brand equity is because of value-for-money products, extensive service centres, low maintenance cost and higher resale value.
Sumeet Bagadia, Executive Director of Choice Broking recommends buying Hero MotoCorp stock. He said that on a weekly chart, the stock has been trading in the range of Rs 2700 – Rs 3000. Crossing the Rs 3000 level can show upside movement, he added. Sumeet said that based on the above technical structure, he is expecting a good upside movement upon the breakout of the formation upto the level of Rs 3100-3200 while downside support comes at Rs 2700.
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Sharekhan says that Hero MotoCorp has renewed focus on gaining market share in the premium bike segment and increasing exports capability. Its partnership with Ather Energy and Harley Davidson will help Hero MotoCorp increase its presence in new technology and premium segment bikes.
Sharekhan says it expects a strong recovery in FY2022, driven by normalisation of economic activities, operating leverage, price hikes and cost-savings under the company’s leap programme, which would drive up margins. Sharekhan expects Hero MotoCorp to reach its historical margin range of 14%-16%. Hence, Sharekhan has retained a Buy rating on Hero MotoCorp.
Hero MotoCorp Key Risks:
Success of rival products in the entry and executive bike segments can impact Hero’s market share in the segments. Moreover, if the second wave of COVID-19 intensifies, it can impact Hero MotoCorp’s sales.
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