Shares of Hero MotoCorp on Monday declined nearly 3 per cent, in line with a weaker trend in domestic equity benchmarks. The stock traded 2.91 per cent lower at Rs 2,548.60 during late trading session today. During the day, it touched an intraday low of Rs 2,531.40 on NSE.
Taking previous closing price into consideration, the shares traded more than 12 per cent lower from their 52-week high of Rs 2,950.
On the sectoral front, the Nifty’s auto index fell 0.63 per cent.
The motorcycle maker launched its first electric scooter on Friday last week. Recently, the company has made a string of investments in electric vehicle (EV) start-ups.
Also Read | Hero MotoCorp forays into e-scooters, launches VIDA V1 priced at Rs 1.5 lakh
In comparison with other EV makers, Hero has been a laggard in launching electric two-wheelers. EV start-ups such as Tiger Global-backed Ather Energy and SoftBank Group-backed Ola Electric have already launched their products into the market.
Hero’s debut model, Vida Plus, would be sold at a starting price of Rs 1.45 lakh.
Expert View
“Hero MotoCorp’s sales volume in Q2FY23 was marginally lower as compared with Q2FY22. We expect yoy (year-on-year) and qoq (quarter-on-quarter) revenue growth for the company to range between 4-5 per cent during the quarter. On a qoq basis, revenue growth is expected to be supported by volume growth and price hike taken by the company. Hero MotoCorp’s EBITDA margin is expected to be lower in comparison with Q2FY22, but we expect some improvement over Q1FY23 (aided by a price hike taken by the company). We expect the bikemaker’s Q2FY23E earnings to be lower than Q2FY22, but is likely to witness growth over Q1FY23,” said Arun Agarwal, Deputy Vice-President – Fundamental Research, Kotak Securities Ltd.
Brokerage View
“Hero MotoCorp (HMCL) unveiled its first in-house developed electric scooter – Vida V1. HMCL intends to move down the price ladder with mass market focused E2W launches as part of the future product offerings. The company indicated that existing annual capex of Rs 1,000 crore will continue in the future and will be focused on EVs and premium motorcycles,” JM Financial stated in its report.
The brokerage “maintained ‘BUY’ with a target price of Rs 3,200.”
Also Read | Maruti, M&M & Hero Moto among stocks that analysts like ahead of September sales data
Elara Capital said, “Success of EV, Hero-Gogoro launches, and Ather Energy valuation are key monitorables and may affect valuation favorably.”
Given the recent correction in stock price, the brokerage “revised its rating to ‘Buy’ from ‘Accumulate’ with a target price at Rs 3,258.”
“We reckon HMCL is an option value candidate with respect to electric vehicle (EV), premium motorcycle and exports. Apart from this, the embedded value of Ather as well as Hero FinCorp is not recognised. The Vida V1 launch shares glimpses of the headway the R&D team has made since 2014. Besides, momentum should pick up in premium motorcycle. Exports can take another two–three years to gain traction given the efforts on customisation of products is rather recent (according to channel checks),” Edelweiss Securities said.
“We expect HMCL to speed up its new product cycle and get it right first time — unlike hits and misses in the past. Retain ‘BUY’ with a target price of Rs 3,179,” the brokerage added.
Meanwhile, Indian equity benchmarks traded on a lower note today amid weak global cues.
