ICICI Direct recommended hold rating on Hero Motocorp with a target price of Rs 2700 in its research report dated April 30, 2019.
ICICI Direct's research report on Hero Motocorp
Hero MotoCorp (HMCL) reported a subdued Q4FY19 performance, particularly on operating margins, which were down 37 bps QoQ to 13.6%. A spike in raw material & employee costs, in particular, drove the weak margin performance. Revenues declined 7.9% YoY to Rs 7,885 crore. Total 2-W sales volume for the quarter came in at 17.8 lakh units, down 11.5% YoY. Consequent PAT for Q4FY19 came in at Rs 730.0 crore, down 24.5% YoY. HMCL announced a final dividend of Rs 32/share for FY19.
Hence, we downgrade the stock from BUY to HOLD. We now value HMCL at Rs 2700 i.e. 14x FY21E EPS of Rs 194/share.
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