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