Hero MotoCorp gains on Q1 margins; Macquarie upgrades

Shares in Hero MotoCorp Ltd gain 4.4 percent after its adjusted operating margins for June-quarter came in at 14.85 percent, higher than estimates of about 13 percent, analysts say.

Hero reported a net profit of Rs 549 crore for the three months to end-June, compared with Rs 6.15 crore a year earlier. Net sales fell to 61.27 billion rupees from 62.47 billion rupees.

"Operating profit is appearing substantially higher than expectation as the company has not taken the full impact of increase in raw material cost given company compensates its vendors with a lag of a quarter," said Abhishek Gaoshinde, an analyst tracking the sector at Sunidhi Securities.

Also, Macquarie upgrades the stock to "outperform" from "underperform" and raises its target price to Rs 1,960 from Rs 1,250, citing attractive valuations.