Buy Hero MotoCorp, target price Rs 3400: Motilal Oswal

Motilal Oswal has buy call on Hero MotoCorp with a target price of Rs 3400. The current market price of Hero MotoCorp Ltd. is Rs 2759.45. Time period given by analyst is one year when Hero MotoCorp Ltd. price can reach defined target.

Hero MotoCorp Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 55178.97 Crore) operating in Auto sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 5648.20 Crore, down -35.51 % from last quarter Total Income of Rs 8758.01 Crore and up 81.08 % from last year same quarter Total Income of Rs 3119.22 Crore. Company reported net profit after tax of Rs 392.01 Crore in latest quarter.


Investment Rationale
HMCL is a good proxy on rural market recovery, with a stronghold in the 100cc Motorcycle segment. It has low vulnerability to EVs, as it garners just 8% of volumes from Scooters, and its core 100cc Motorcycle business is less prone to the risks from EVs. The stock trades at ~15.6x/12.9x FY22E/FY23E EPS.

Promoter/FII Holdings
Promoters held 34.8 per cent stake in the company as of June 30, 2021, while FIIs held 35 per cent, DIIs 20.2 per cent and public and others 10.1 per cent.