Hero MotoCorp share price: Anand Rathis says Buy with price target of Rs 3300

Anand Rathi said that the recent correction in the markets dragged Hero Motocorp stock from a high of Rs 3600 towards Rs 2800 mark which is almost 20% erosion from the top. Post this fall, the stock found support at the placement of ICHIMOKU CLOUD on the weekly scale and that could be a demand zone. Also we are witnessing a ‘Bullish HAMMER’ candlestick pattern on the weekly chart which indicates a possibility of strong reversal. Hence, Traders are advised to buy the stock in the range of Rs 2920 – Rs 2900 with a stop-loss of Rs 2710 for the upside potential target of Rs 3300 in 1 – 3 months.

Hero MotoCorp is India's leading two wheeler company. Hero MotoCorp is undoubtedly the biggest two-wheeler manufacturer in India, as well as in the global market too. Hero MotoCorp has eight globally benchmarked manufacturing facilities, including six in India (Dharuhera, Chittoor, Gurugram, Haridwar, Neemrana, Gujarat) and one each in Colombia and Bangladesh. Hero MotoCorp grabs 37.04% market share in FY2021 despite 10.1% sales decline. Hero MotoCorp has announced it has entered a strategic partnership with Taiwanese electric scooter manufacturer Gogoro to tap into India’s nascent EV two-wheeler space.

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Sharekhan says 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 increase its presence in new technology and premium segment bikes. Sharekhan 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%.

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.