Hero Motocorp can deliver 15-20% return: Sachin Shah

Sachin Shah, Fund Manager at Emkay Investment Managers told CNBC-TV18, "I think in terms of valuation, Maruti Suzuki is a bit expensive at this point in time. So, that is the only challenge. One of the stocks that we own and we think is looking little better is Hero Motocorp. Obviously, the volume numbers haven’t been very great but if you see the October numbers and even if you just see the entire FY'16 year-to-date (YTD), now the volume is just about 2-3 percent down. More importantly, the franchise value is still very strong; they still have a market share in the range of about 52-53 percent." "If you see the quarterly results, the profitability has been fairly good of course to do with some bit with the raw material price gains but also to do with little better product mix because the realisations have been little better. The stock is available at very reasonable valuations. It is just under 20 times, may be 17-18 times March 2016," he said. "With such a strong franchise and if one believes that in a country like India where potential for the two wheeler segment is still fairly good with the kind of public transport system that we have and with overall progress at the bottom of the pyramid, I think there is a huge potential. So, this company on a longer-term can actually deliver 15-20 percent compounded kind of return," he added.