Hero MotoCorp Ltd. Impulse motorcycles are displayed at a Pashupati Motors dealership in New Delhi, India (Photographer: Prashanth Vishwanathan/Bloomberg)  

Hero MotoCorp Drops Most In A Month; Brokerages See Volume Growth In FY18

The country’s largest two-wheeler maker Hero MotoCorp Ltd. is likely to benefit from rural demand recovery and new product launches in the current financial year, according to brokerages.

Shares of Hero MotoCorp fell as much as 2 percent, the most in nearly a month, to Rs 3,745 in early trade, after it announced flat net profit growth in the second quarter yesterday, missing street estimates.

Most brokerages maintained their stance on the company and hiked target price, expecting a decent growth in two-wheeler volumes during the upcoming quarters.

Here’s what brokerages had to say about Hero Motocorp after its results announcement.


  • Stock Rating: Maintained ‘Outperform’
  • Target Price: hiked to Rs 4,400 from Rs 4,200, implying a potential upside of 15.2 percent from yesterday’s close
  • Two-wheeler demand is improving with the revival in rural income and we expect Hero MotoCorp to be a key beneficiary of rural demand recovery
  • Operating margin surprised positively
  • Hero MotoCorp lost market share in domestic two-wheelers


  • Stock Rating: Maintained ‘Sell’
  • Target Price: Hiked to Rs 3,000 from Rs 2,950, implying a potential downside of 27.3 percent from yesterday’s close
  • Operational results during the previous quarter was broadly in line with estimate.
  • Weak volume and margin outlook post current financial year
  • Post the implementation of GST, the company is receiving only partial incentives at its excise-exempt Haridwar plant, which impacted operating performance
  • Expect the current financial year to be decent for the two-wheeler industry, but expect growth to moderate in the next two financial years
  • Expect earnings per share to grow at a compounded annual growth rate of 6 percent over the three financial years till March 2020
  • Negatives: slowing industry growth, adverse demand profile shifts and multiple margin headwinds

Credit Suisse

  • Stock Rating: Maintained ‘Neutral’
  • Target Price: Hiked to Rs 3,560 from Rs 3,230, implying a potential downside of 6.8 percent from yesterday’s close
  • Previous quarter results were in line with our estimates at the operating income and net profit levels
  • Expect traction in two-wheeler volumes in the second half of the financial year as well; product launches should help further
  • Results better than expected on margins; margins during the second half is likely to be softer on raw materials and other expenses
  • Halol plant to ramp up in the next financial year, once Haridwar tax benefits expire.
  • Significant change in accounting of Haridwar revenues and costs impacted line items
  • Reduce estimates for the current financial year to build in state excise incentives not coming through


  • Stock Rating: Maintained ‘Buy’
  • Target Price: Cut to Rs 4,650 from Rs 4,750, implying a potential upside of 21.7 percent from yesterday’s close
  • Expect demand growth in the second half for two-wheelers to remains strong.
  • Hero MotoCorp is our preferred pick in the sector
  • Expect further re-rating for the stock as company delivers expected compound annual growth rate of 10 percent in volume over the two financial years till March 2019
  • Operating income and net profit remained inline even after revenue missed.
  • Scooter discounting impact likely to be limited