Hero MotoCorp’s share price saw a significant increase on Thursday after Emkay Global Financial Services upgraded the stock and raised its target price. The brokerage firm changed its rating for Hero MotoCorp shares from ‘Reduce’ to ‘Buy’ and increased the target price from ₹4,800 to ₹5,100. Emkay Global believes that Hero MotoCorp shares are attractively valued and that the company’s valuation discount compared to Bajaj Auto is at a multi-year low. Chirag Jain, Senior Research Analyst at Emkay Global Financial Services, stated that Hero MotoCorp trades at a lower price-to-earnings ratio compared to its two-wheeler peers, even after adjusting for its stake in Hero FinCorp and Ather Energy.
Despite a recent correction in share price, Hero MotoCorp’s market share has improved due to the positive response to its newly launched Xtreme 125R motorcycle in the growing 125 cc category. The domestic 125 cc motorcycle market has been expanding rapidly, accounting for 27% of overall motorcycle volumes in March 2024 compared to 14% in FY19. In April 2024, retail volumes for the two-wheeler industry increased by around 26% year-on-year, indicating a continued recovery. Hero MotoCorp’s volumes for the same period were up around 23%, further reinforcing the recovery trend.
Hero MotoCorp’s share price surged on Thursday following an upgrade by Emkay Global Financial Services. The brokerage firm raised its target price for the stock and changed its rating from ‘Reduce’ to ‘Buy’. Emkay Global believes that Hero MotoCorp shares are undervalued compared to Bajaj Auto and that the company’s market share has improved due to the positive response to its new motorcycle launch. The domestic 125 cc motorcycle market has been growing rapidly, accounting for a larger share of overall motorcycle volumes. In April 2024, retail volumes for the two-wheeler industry increased by around 26% year-on-year, with Hero MotoCorp’s volumes up around 23%.
