Hero MotoCorp shares bounce back after Q3 disappointed brokerages

Shares of Hero MotoCorp Limited ended over a percent higher at Rs 4,744  on February 13, a day after the stock crashed over 4 percent after multiple brokerages turned bearish on the two-wheeler major amid valuation concerns.

The counter closed lower than the day’s high as it surged three percent in the early hours of the session.

In the third quarter, the company witnessed a 51 percent year-on-year growth in net profit, reaching Rs 1,073.38 crore. This substantial increase was attributed to factors such as reduced input costs, operational leverage, higher average selling prices, and a notable surge in volumes.

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As per analysts, Hero’s current valuations reflect the cyclical recovery, with the stock delivering a remarkable return of over 91 percent in the past year.  “While the company is accelerating its portfolio and reach actions to improve positioning, the effect on market share remains a key monitorable,” Emkay said in a recent note on the company.

Global brokerage firm Morgan Stanley is “underweight” on the stock with a target price of Rs 3,638, a downside of about 25 percent from the previous close. It cited disruption risk in the core segment and elevated valuations for the rating.

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