Investec Securities downgrades Hero MotoCorp to hold, lowers target price to Rs 2,400

Investec Securities has downgraded Hero MotoCorp to hold from buy in the long term and lowered target price to Rs 2,400 from Rs 3,130. Shares of Hero MotoCorp ended down 1.44% at Rs 2,296.90 on Wednesday while the BSE Sensex closed 172.69 points up at 40,412.57.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 7660.27 crore, down -6.42% from last quarter sales of Rs 8185.66 cCrore and down -16.44 % from last year same quarter sales of Rs 9167.86 crore. The company has reported net profit after tax of Rs 869.78 crore in the latest quarter.


The company’s top management includes Mr.M Damodaran, Mr.Paul Edgerley, Mr.Pawan Munjal, Mr.Pradeep Dinodia, Mr.Suman Kant Munjal, Mr.Vikram S Kasbekar, Ms.Shobana Kamineni, Ms.Tina Trikha, Prof.Jagmohan Singh Raju. Company has BSR & Co. LLP as its auditors. As on 30-09-2019, the company has a total of 199,726,884 shares outstanding.

Investment Rationale

Hero’s franchise is likely to face challenges from Bajaj’s migration to BS-VI, said Investec. Strong product launches by competitors and Hero’s lack of product innovation and differentiation raises concerns on its ability to retain its strong hold in the domestic market, the brokerage said. Three recent exits from the top management are also worrisome, said Investec.