Home/ Markets / Stock Markets/  As this auto stock forays into EVs, brokerages turn bullish, see strong upside

Hero MotoCorp has made its entry into the electric vehicles (EVs) space with a premium scooter. The company has launched its first own-developed E2W VIDA V1, which is positioned at the upper end of the electric scooter market. 

“Hero intends to build an ecosystem for EVs under VIDA, which will include multiple product launches, omni-channel distribution including a D2C model with several ownership options, and financing and service subscription plans," said global brokerage house Jefferies while rating Hero Moto shares with a Buy rating and a target price of 3,000 apiece.

Hero plans to widen its EV portfolio to cover multiple price points and use cases. In the medium-term, Hero intends to expand its EV portfolio, including high-performance e-motorcycles and B2B vehicles. “Hero is taking an omni-channel approach for EV distribution and also plans to launch EV-specific dealerships in future. Success of Hero's EVs can improve the company's long-term growth outlook," the note added.

V1 will be launched in a phased manner, with the product being available for retail sales in Delhi, Bengaluru and Jaipur to begin with and, subsequently, in other cities and it will eventually see presence in export markets.

Analysts at brokerage Emkay said that they attended HMCL’s electric-scooter launch, where it unveiled its first offering of the V1 model with the Vida brand, with more models expected to be introduced ahead that would cater to the B2B, motorcycle and other use-case customers.

“In our view, the Vida V1 model has been well-designed, scores above peers on performance and has buy-back assurance. However, the pricing is 20-40% higher than peers’ models such as TVS iQube and Ather 450 Plus. This pricing gap is likely to fill up in future, as more model launches are expected across different price-points," it said.

Emkay has maintained its positive stance on the auto stock, underpinned by expectations of a cyclical upturn in domestic 2Ws which generally lasts for at least three years, increasing focus on EVs, margin expansion emanating from better scale, and inexpensive valuations. It also has Buy rating with a target price of 3,300 per share.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Updated: 10 Oct 2022, 12:36 PM IST
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