Buy Hero Motocorp; target of Rs 2124: Firstcall Research

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Buy Hero Motocorp; target of Rs 2124: Firstcall Research

Firstcall Research is bullish on Hero Motocorp and has recommended buy rating on the stock with a target of Rs 2124 in its January 27, 2012 research report.

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Firstcall Research is bullish on Hero Motocorp and has recommended buy rating on the stock with a target of Rs 2124 in its January 27, 2012 research report.

"Hero MotoCorp Ltd. (formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of two - wheelers, based in India. Hero MotoCorp Ltd, the new name of Hero Honda Motors Ltd after the Hero group & Honda Motor Company called off their 26-year-long association. In 2001, the company achieved the coveted position of being the largest twowheeler manufacturing company in India and also, the 'World No.1' two-wheeler company in terms of unit volume sales in a calendar year. Hero MotoCorp Ltd. continues to maintain this position till date. In the 1980's the Company pioneered the introduction of fuel-efficient, environment friendly four-stroke motorcycles in the country. It became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006. Its plants use world class equipment and processes and have become a benchmark in leanness and productivity."

"During the quarter, the company disclosed a standalone profit of Rs. 6130.30 million as against of Rs. 4290.00 million for the quarter ended December 31, 2011. Net sales are increased by 16.85% to Rs. 60314.50 million from Rs. 51616.60 million in the same quarter previous year. Total income grew by 16.92% to Rs.61077.30 million from Rs.52236.90 million in the same quarter last year. Company EPS is stood at Rs. 30.70 for the quarter ended December 2011."

"At the current market price of Rs.1880.00, the stock is trading at 15.47 x FY12E and 12.96 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.121.53 and Rs.145.07 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 21% and 10% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 9.34 x for FY12E and 7.95 x for FY13E. Price to Book Value of the stock is expected to be at 6.97 x and 4.53 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 2124 for medium to long term investment," says Firstcall Research report. 

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment