Buy Hero Moto on dips, stock may trend higher: Analysts
Hero MotoCorp rose 2.9% to an all-time closing high of ₹4,174 in Thursday's trading, as the recent bullish wave has resulted in a technical breakout in stock, opening the likelihood of further gains of as much as 56% from current levels. Analysts are recommending investors to buy the stock on dips as business prospects too are favouring the company at this juncture.
Hero shares crossed the ₹4,000 level on December 26 for the first time after September 2017 amid the run-up in recent weeks.
«Hero MotoCorp is breaking out after 6.3 years of consolidation and the breakout point is ₹4,050,» said Dharan Shah, founder of Tradonomy, a Mumbai-based investment research advisor, which has set a price target of ₹6,540 on the stock. «While Bajaj Auto is valued similarly to it, Hero MotoCorp on technical trend looks set to move higher right now.»
Hero MotoCorp is trading at a PE ratio of 24.19 times, while Bajaj Auto is at 29.51 times.
Hero shares have gained 10.8% in the past five trading sessions and 43.3% in the past six months. The Nifty Auto rose about 5% in the past week and 24% in the past six months.
«We believe the shares of Hero MotoCorp have further upside potential, given that they have upgraded their target segment for 125cc vehicles to over 150cc segment, which has worked out well for the company,» said KS Maurya, AVP Research-Choice Institutional Equity.
