JP Morgan cuts 'Hero Motocorp' price target by 11 per cent

MUMBAI: JP Morgan has reiterated its underweight rating on Hero Motocorp as it lowered its 2013-14 earnings estimate citing uncertain outlook.

"The demand environment for two wheelers continues to remain sedate, with growth rates coming off sharply over the year, system inventories at over a month (ahead of the festive season) and competitive intensity increasing," said JP Morgan analysts Aditya Makharia and Ritesh Gupta in a note to clients.

The broking firm cuts its price target for Hero shares to Rs 1,690 from Rs1,900. It lowered its 2013-14 earnings estimates by 7% to factor in the sedate outlook.

"We believe that given an uncertain economic growth outlook, uneven rainfall trends and rising fuel prices, growth is likely to remain muted over 2H. Further, system inventories remain elevated at over a month (of sales) at Hero," said the JP Morgan analyst.