Attractive risk-reward? Emkay upgrades Hero MotoCorp stock to 'Buy'; details here

Shares of Hero MotoCorp have recovered over 82 per cent from their 52-week low of Rs 2,470.60. However, the large-cap stock has corrected over 10 per cent from its recent highs of Rs 4,979.95.

In its recent report, Emkay Global upgraded the stock to 'Buy' from 'Reduce' earlier with a revised target price of Rs 5,100 from Rs 4,800. It believes Hero MotoCorp shares remain attractively valued and its valuation discount versus Bajaj Auto is now at a multi-year low.

"Product action coupled with sustenance of the domestic two-wheelers growth story and positive initial outlook for monsoons prompt us to build in 12% EPS CAGR over FY24E-26," it said.

"Hero MotoCorp’s stock price has corrected from the recent highs, even as the newly launched Xtreme 125R in the fast-growing 125cc motorcycle category has been received well (per dealer checks), and led to a reversal in market share (15.7% in March 2024 vs. 9.7% in December 2023; peak share of 50%)," the broking firm added.

Emkay Global also believes 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 visibility in two-wheelers. Initial weather forecasts for the 2024 monsoon season are also encouraging, potentially further driving rural demand.

Recently, Hero MotoCorp and its authorized distributor CG Motors, announced its aggressive business plans and inaugurated a product assembly facility in the country.

The world’s largest motorcycles and scooter manufacturer launched four globally popular products – Xpulse 200 4V, Super Splendor, Splendor+ motorcycles and Xoom 110 scooter. The four products will be assembled locally at the new state-of-the-art assembly facility located in CG Industrial Park in Nawalparasi.