The broking firm Jefferies has raised the target price on the stock of Hero MotoCorp to Rs 5,325 from Rs 4,800, an increase of 20%. It has kept the rating unchanged to “Buy” as the brokerage house believes the company to have a “strong cyclical recovery in two-wheelers.” Also, it believes any potential success of premium bikes and electronic vehicles can work as a growth catalyst.
Further, the brokerage house said that the company’s new 125cc bike, Xtreme-125R, filled a key product gap, which can help the company regain some share in the segment. The company’s share in the 125cc segment declined “from an average 43% over FY19-21 to just 18% in YTD.”
The brokerage house believes the industry volumes to grow 11% in FY24, which will be followed by 15% growth over FY24-26. The company’s earnings per share is expected to rise 32% year on year in FY24 further to be followed by 18% growth over FY24-26, said the brokerage house in a research report.
“Hero should benefit from the expected revival in Indian 2W (two-wheeler) demand, but is likely to face an adverse demand profile shift,” said Jefferies in the research report.