Hero MotoCorp share price attractively valued, says Emkay Global; upgrades rating, raises target price

Emkay Global upgraded the standing for Hero MotoCorp shares to ‘Buy’ from ‘Reduce’ earlier. The brokerage raised Hero MotoCorp stock terms people to ₹5,100 from ₹4,800 earlier. 

The broking location believes Hero MotoCorp shares stay attractively valued and its valuation discount versus Bajaj Auto is present astatine  multi-year low. 

Adjusted for involvement successful Hero FinCorp and Ather Energy, Hero MotoCorp trades astatine 17x FY26E PER versus 25x halfway FY26E PER for two-wheeler peers, said Chirag Jain, Senior Research Analyst astatine Emkay Global Financial Services.

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Hero MotoCorp stock terms has corrected 11% from the caller highs, adjacent arsenic the recently launched Xtreme 125R successful the fast-growing 125 cc motorcycle class has been received good and led to reversal successful marketplace share.

The home 125 cc motorcycle class has been increasing fast, and present forms 27% of wide motorcycle volumes versus 14% successful FY19. The precocious launched Hero MotoCorp Xtreme 125R has received encouraging archetypal response, starring to crisp marketplace stock betterment for the institution to 15.7% successful March 2024 versus the caller debased of 9.7% successful December 2023, Jain noted.

The two-wheeler betterment continues pace, with April 2024 retail volumes arsenic per Vahan up astir 26% YoY connected MTD basis, pursuing the 9% maturation successful FY24. For Hero MotoCorp, April MTD volumes are up astir 23%, indicating further deepening of the recovery. 

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“We support our content that the replacement-led upturn (with FY24 manufacture volumes inactive 15% beneath the FY19 peak; mean fleet property astatine a multiyear high) provides a 2-3-year maturation visibility successful two-wheelers. Initial upwind forecasts for the 2024 monsoon play are besides encouraging, perchance further driving agrarian demand," said Jain.

Emkay Global builds-in 9%, 11% and 12% volume, gross and net per stock (EPS) CAGR estimates implicit FY24 - FY26 for Hero MotoCorp.

At 12:30 am, Hero MotoCorp stock terms was trading 1.19% higher astatine ₹4,448.55 apiece connected the BSE. 

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Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier making immoderate concern decisions.

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Published: 25 Apr 2024, 12:35 PM IST