Hero MotoCorp’s Karizma launch fails to impress brokerages; check stock rating, target price

Despite bike enthusiasts cheering the revival of Hero MotoCorp’s Karizma brand, several brokerage firms remain cautious about the company. While the premium segment of the company continues to perform well, analysts suggest that other underlying factors could hamper the overall growth of the Gurugram-based automobile giant.

Brokerage house UBS has maintained a sell rating on the stock with a target price of Rs 2,650. Analysts suggest that the commuter segment, constituting about 75-80 percent of Hero’s volumes, is still struggling. “That’s the area where the company is losing market share”, UBS said in its August 29 note. “Investor optimism on launches looks overdone while risks in core business rise.”

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Global firm Goldman Sachs also has a sell rating on the company with a target price of Rs 2,490. It states that at current pricing, Karizma is expected to be a favourable product. However, volume contribution by the new launch needs to be monitored carefully, analysts at the firm said.

Also Read: Hero MotoCorp revives ‘Karizma’ brand, aims for wider play in premium segment

On the other hand, Citi has a buy call and assigned a target price of Rs 3,600, marking a 20 percent upside from the closing price of August 29. Analysts at the firm believe that the introduction of Karizma XMR marks another stride towards enhancing the premium aspect of the company. The specifications offer an appealing proposition, especially in comparison to comparable models from Bajaj and Honda. Moreover, the pricing of the new Karizma XMR holds a slight premium compared to rivalling models.

With Karizma, the company aims to stamp its authority in the 2-wheeler premium segment. The bike comes at an introductory price of Rs 1,72,900 (ex-showroom).

Also Read: Hero MotoCorp receives more than 25,000 bookings for Harley-Davidson X440

The world’s biggest two-wheeler manufacturer has already commenced bookings through its official website and authorised dealers in the country.

At 3:30 pm, the stock closed at Rs 2,945, down 1.4 percent from the previous close on the NSE.

This is the automobile majors’ second launch in quick succession. In July, Hero’s partnership with Harley Davidson helped it enter the 440cc segment where it had no presence. The Harley X440 is a premium motorcycle developed in collaboration between the two companies.

Also Read: Aspirations ride high on Hero-built Harley-Davidson X440

This marked the entry of both Hero MotoCorp and Harley Davidson in to the 440cc segment for the first time in India. It boasts a single-cylinder, oil and air-cooled engine with a displacement of 440cc. The X440 is the inaugural premium motorcycle introduced as part of the licensing agreement between the two companies.

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