Hero MotoCorp Ltd. share price target

The stock is trading at an attractive valuation of 14.2x on FY20E and it offers a dividend yield of ~3.4%. At this valuation, the risk reward is favorable. We have a BUY rating on the stock, with a TP of Rs 3,080 (16x FY21 EPS). Hero upping the ante in the premium segment: Hero has launched a range of premium 200cc bikes as it addresses white spaces in its portfolio. The OEM has been practically absent from the premium segment, post its split with Honda in 2010. The new launches reflect Heros commitment to gain market share in the high end segment, which accounts for ~20% of the overall motorbike market. By offering a complete portfolio, Hero will be better able to withstand competition as other OEMs have been increasing competitive intensity in the entry level segment. Also, these launches will enable the market leader to retain market share at 50% in the overall bike segment, in our view.

With the overhang of the insurance cost rise as well as the liquidity crunch still persistent in the market, consumer sentiment continues to be weak. Despite the festive season / wedding season in the north (Apr onwards), rural demand has not shown any recovery. Further, in spite of huge inventory correction undertaken by the company over Q4FY19, HMCL's current inventory stands higher at 45-60 days and the management expects further correction in Q1FY20. Management expects the industry to grow at mid-single digits over the current fiscal with H2FY20 growing ~10% YoY on the back of...

FY18 was a robust year for domestic 2-W industry and HMCL, in particular, with the company seeing a volume growth of 14% YoY. FY19, however, was challenging, with mere 3% volume growth primarily tracking an increase in cost of ownership due to increase in fuel, insurance and financing costs, which coincided with the high sales festive period i.e. Dussehra-Diwali. Going forward, with system inventory still higher than the normal range and muted demand prospects, we expect HMCL to clock volume growth of 6% in FY20E. It is expected to be supported by pre-buying ahead of BS-VI launch...

Yes Bank (YES) saw a dismal Q4FY19, posting its first-ever quarterly loss of Rs 15bn as the new leadership prudently built in a 20% contingent provision on Rs 100bn of potentially stressed exposure. Guidance disappointed as YES now expects to (a) attain 1% ROA in three years, (b) post lower long-term growth of 20-22%, and (c) incur credit costs of 125bps in FY20. We pare FY20E/FY21E earnings by ~40% on elevated provisions, higher opex and...

via the launches of Destini and Maestro Edge, as we see industry wide shift from 110cc to 125cc on the scooters. In this way, we believe that despite competition from Bajaj Auto, the company will be able to maintain its overall market share at 50%. On BS6 pre-buy, HMCL indicated that there would be a meaningful incentive for customers to buy a BS4 product over a BS6 product. Prima facie it looks...

During Q4FY19, HMCL's sales declined by 7.9% YoY to Rs78.9bn (our Estimates Rs77.4bn). Its EBITDA margins contracted by 244bps YoY to 13.6% (Our estimates 13.9%).

Amidst a challenging demand environment and rising competition (particularly from Bajaj), Hero has defended market share due to its brand franchise. Further, management is upping the ante in the premium segment with multiple product launches. The stock is trading at attractive valuations of 14.5x on FY20E estimates and it offers a dividend yield of ~3.3%. The company continues to enjoy healthy return ratios (with ROE's in excess of 20%). We re-iterate our BUY rating on the stock. Heros 4Q results were inline with estimates at the operating level the EBITDA came in at Rs 10.7bn, with a reported margin of 13.6%. Higher tax led to a PAT miss(-25% YoY, -5% QoQ). With a full year dividend of Rs 87 (~3.3% yield) and steady market share, our BUY stands. Our TP is Rs 3,080 (at 16x FY21E EPS), with estimates falling by ~4%.

industry contract significantly in the face of external factors. For this quarter, Hero MotoCorp corresponding quarter FY'18). The EBIDTA margin for the quarter stood at 13.6%. The current fiscal (FY 2020) is expected to be yet another challenging year in view of the...

Industry woes to continue due to higher inventory levels and weak sentiment; Hero expects flat sales in H1FY2020: The twowheeler (2W) industry's growth declined sharply in H2FY2019, as increased insurance cost, liquidity financing crunch and slowing economic growth dented sales. From double-digit growth in H1FY2019, the 2W industry posted flat sales in H2FY2019. With uncertainty before general...

Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of two wheelers based in India and also 'World No.1' Twowheeler Company in terms of unit volume sales in a calendar year. It has a total market share of 36% in 2wheeler industry and 50% market share in Motorcycles category. It has 4 globally benchmarked manufacturing facilities; two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in Northern India. The third manufacturing plant is based at Haridwar, in the hill state of Uttrakhand; the latest...