Shares of Hero MotoCorp ended up 6% at ₹2,674.10 on Thursday.
The financial services firm has based its estimate on improving two-wheeler industry demand, better supply chain, high rural exposure and scope for channel restocking with the current inventory at six weeks – lower than the typical 8-10 weeks of inventory in the run-up to the festive season.
“Given the high exposure to rural and better supply chain versus peers, HMCL has been gaining market share of late. This, along with typical channel restocking in the run-up to the festive season, points to very solid first-half growth,” said Bank of America Securities.
The firm also sees the worries around the shift to electric vehicles as excessive.
“Hero MotoCorp’s portfolio of entry bikes is less vulnerable to EV shift at least for now and e-scooter launch is imminent in the calendar year 2022,” said Bank of America Securities.
The firm sees a buying opportunity at current levels with the stock trading one standard deviation below its historical mean price-to-earnings ratio on low cyclical earnings.
Hero MotoCorp could log a 10% compounded growth in volume over the FY22-FY24 period, said Bank of America Securities.