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Business News/ Markets / Stock Markets/  Hero MotoCorp share price attractively valued, says Emkay Global; upgrades rating, raises target price
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Hero MotoCorp share price attractively valued, says Emkay Global; upgrades rating, raises target price

Hero MotoCorp share price has corrected 11% from the recent highs, even as the newly launched Xtreme 125R in the fast-growing 125 cc motorcycle category has been received well and led to reversal in market share.

Hero MotoCorp shares remain attractively valued and its valuation discount versus Bajaj Auto is now at a multi-year low, analysts said. (Photo: Bloomberg News)Premium
Hero MotoCorp shares remain attractively valued and its valuation discount versus Bajaj Auto is now at a multi-year low, analysts said. (Photo: Bloomberg News)

Hero MotoCorp share price traded over a percent higher on Thursday after brokerage firm Emkay Global Financial Services upgraded the stock and raised its target price.

Emkay Global upgraded the rating for Hero MotoCorp shares to ‘Buy’ from ‘Reduce’ earlier. The brokerage raised Hero MotoCorp share price target to 5,100 from 4,800 earlier. 

The broking house believes Hero MotoCorp shares remain attractively valued and its valuation discount versus Bajaj Auto is now at  multi-year low. 

Adjusted for stake in Hero FinCorp and Ather Energy, Hero MotoCorp trades at 17x FY26E PER versus 25x core FY26E PER for two-wheeler peers, said Chirag Jain, Senior Research Analyst at Emkay Global Financial Services.

Also Read: Stock to buy: Emkay Global raises TVS Motor share price target; stock remains top pick in auto OEMs

Hero MotoCorp share price has corrected 11% from the recent highs, even as the newly launched Xtreme 125R in the fast-growing 125 cc motorcycle category has been received well and led to reversal in market share.

The domestic 125 cc motorcycle category has been growing fast, and now forms 27% of overall motorcycle volumes versus 14% in FY19. The recently launched Hero MotoCorp Xtreme 125R has received encouraging initial response, leading to sharp market share improvement for the company to 15.7% in March 2024 versus the recent low of 9.7% in December 2023, Jain noted.

The two-wheeler recovery continues pace, with April 2024 retail volumes as per Vahan up around 26% YoY on MTD basis, following the 9% growth in FY24. For Hero MotoCorp, April MTD volumes are up around 23%, indicating further deepening of the recovery. 

Also Read: Kotak Mahindra Bank share price tanks 10% as RBI action seen hurting growth, margins; here's what analysts say

“We maintain our belief that the replacement-led upturn (with FY24 industry volumes still 15% below the FY19 peak; average fleet age at a multiyear high) provides a 2-3-year growth visibility in two-wheelers. Initial weather forecasts for the 2024 monsoon season are also encouraging, potentially further driving rural demand," said Jain.

Emkay Global builds-in 9%, 11% and 12% volume, revenue and earnings per share (EPS) CAGR estimates over FY24 - FY26 for Hero MotoCorp.

At 12:30 am, Hero MotoCorp share price was trading 1.19% higher at 4,448.55 apiece on the BSE. 

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 25 Apr 2024, 12:35 PM IST
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