BOB Capital Markets maintains 'reduce' on Hero MotoCorp, target price Rs 2,360

BOB Capital Markets has maintained its reduce rating on Hero MotoCorp with a target price of Rs 2,360 as against the current market price of Rs 2,240 citing high competitive intensity and a potential demand hit from BS-VI transition. While the firm likes HMCL’s renewed efforts to expand beyond its core commuter segment and build an emerging mobility vertical, benefits if any will accrue after a long gestation period, said the brokerage. The company plans to invest Rs 10,000 crore over 5-7 years towards new products, network premiumisation and mobility solutions. Given potentially weaker free cash flow on elevated investments, the brokerage has cut its target PE multiple to 13 from 14.