BofAML has maintained its buy rating on Hero MotoCorp after September quarter results but slashed its target price to Rs 3,500 from Rs 3,800 earlier
Two-wheeler major Hero MotoCorp's second quarter (July-September) profit declined 3.4 percent year-on-year to Rs 976.3 crore, dented by a weak operational performance which prompted brokerage firms to reduce their target price.
Revenue from operations grew by 8.6 percent YoY to Rs 9,090.9 crore for the quarter ended September 2018, driven by volume growth.
The company sold 21.3 lakh units in the quarter, a 5.5 percent more than 20.2 lakh units sold in the same period a year ago.
Global brokerage firms CLSA, Credit Suisse and BofAML have maintained their rating but have slashed their respective target price for Hero MotoCorp after the Q2 results.
CLSA has maintained 'sell' on Hero MotoCorp and has slashed its 12-month target price to Rs 2,800 from Rs 3,000 earlier.
“Weak operating results were largely due to higher input cost and expiry of duty benefits at Haridwar plant. Higher ownership costs impacted 2-wheeler demand,” it said. Margin concern continues given high competitive intensity amidst a cost push, added the note.
Operational numbers were down for the quarter due to higher depreciation cost (up 11.6 percent YoY), other expenses (18.7 percent) and raw material cost (13.6 percent).
BofAML has maintained its buy rating on Hero MotoCorp but has slashed its target price to Rs 3,500 from Rs 3,800 earlier.
Q2 results largely were in line with estimates as higher volumes have offset pricing competition. The tailwind from the rural uptick is likely to keep volumes healthy. The recent correction makes the risk-reward favourable, added the note.
Another global investment bank, Credit Suisse has maintained its neutral rating and has slashed its target price to Rs 3,020 from Rs 3,500 earlier.
Q2FY19 results were almost in line with estimates. The management says that the availability of finance is not a concern for growth in the festive season. The global investment bank allots lower valuation multiple on concerns related to 2-wheeler industry growth.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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