Jefferies cuts Hero MotoCorp target price by Rs 200, maintains 'buy'

Shares of Hero MotoCorp – a leading two-wheeler maker – were in see-saw trade after global brokerage firm Jefferies trimmed the auto company’s stock price target on Tuesday.

Hero MotoCorp shares pared early morning gains to trade in the flat, it touched the day’s low of Rs 2,448.7 per share, down around 0.5 per cent on the BSE.

At around 12:10 pm, the counter quoted Rs 2,464.25, up Rs 4.55 or 0.18 per cent from Monday’s closing of Rs 2,459.70 per share.

Earlier this morning, Jefferies maintained a ‘buy’ rating on Hero MotoCorp with a reduced target of Rs 3,000 per share from Rs 3,200 per share earlier.

Hero MotoCorp should benefit from the potential revival in Indian two-wheeler (2W) demand, Jefferies said expecting scooters and 125cc+ premium motorcycles to grow faster than sub-125cc motorcycles though, which would result in the demand profile shifting adversely for the company.

“We expect Hero MotoCorp’s volumes to post a healthy 14 per cent CAGR over FY23-25E, although lower than our estimate of 18 per cent for the industry,” the brokerage said in its note.

It also believes that the success in premium bikes, electric vehicles, or exports could improve Hero MotoCorp's long-term outlook and expects EBITDA margins to expand amid improving demand.

Jefferies is positive on overall auto sector as the segment is in midst of a strong earnings cycle and expects that the two-wheelers likely to outpace four-wheelers in terms of growth.

Hero MotoCorp share price

Hero MotoCorp shares grew by nearly six per cent in the last one year, while it has declined by over three per cent in the last six months. In year-to-date, the stock is down more than nine per cent.

In comparison, Nifty50 is flat with positive bias in the one year, and up four per cent in the last six months, while it has dipped almost three per cent YTD.

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