Hero MotoCorp share price to rise 31 per cent; Stock market experts recommend 'buy'
Investors can buy Hero MotoCorp shares for the long-term for a target price of Rs 3150, say stock market experts.
Hero MotoCorp share price has moved nearly Rs 100 northward in the last one-month. One month ago, Hero MotoCorp shares were at Rs 2348 and now it has soared to Rs 2448. Interestingly, the auto stock has made a high of Rs 2501.85 while its low in the last month's trade is Rs 2317.55. So, Hero MotoCorp stock price has made a range of Rs 2315 to Rs 2500, which means a trading range of Rs 200.
Speaking on the Hero MotoCorp share price outlook, SEBI registered technical stock analyst Simi Bhaumik said, "Hero MotoCorp shares are portfolio stock and one can buy it for long-term only. Recently, the Hero MotoCorp shares have got strong support at Rs 2350 and it should be maintained as the stop loss while taking a buy position in the counter. The Hero MotoCorp shares will hit Rs 2500 to 2550 per stock levels in near three months."
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Recommending stock market investors to buy Hero MotoCorp stocks at the current level, Bhaumik said that they should keep on accumulating Hero MotoCorp shares after 30-40 rupee dip till it's above Rs 2350.
Giving information on fundamentals of the Hero MotoCorp shares, NL Raghunandhan, Analyst at Emkay Global said, "Hero MotoCorp revenue declined 11 per cent yoy to Rs 70bn against the estimated Rs 68.3bn, slightly above estimates due to higher-than-expected spares revenue. Volumes declined 14 per cent yoy to 1.54 mn units, while realisation grew 4 per cent yoy to Rs 45,407/unit on price increases and better mix. EBITDA margin expanded 80 bps yoy to 14.8 per cent against the estimated 13.8 per cent, which is again above estimates due to the higher share of spares and cost-reduction efforts. EBITDA declined 6 per cent yoy to Rs 10.4bn against the estimated Rs 9.2bn. Overall, adjusted PAT grew 13 per cent yoy to Rs 8.8bn against Rs 6.9 bn estimated figures. This could happen due to a higher operating margin and a lower tax rate. The effective tax rate declined to 13 per cent from 32 per cent in Q3FY19 and 16 per cent in Q2FY20.
NL Raghunandhan's message to investors was this, "Earlier our target in long-term was Rs 3,150 in 12-month but due to the not so robust fundamentals but above the estimates, we are suggesting share market investors book partial profit at Rs 2,800 levels."
Suggesting share market investors to maintain trailing stop loss after booking partial profit at Rs 2,800 levels, Simi Bhaumik said that they should maintain a trailing stop loss at Rs 2500 once it hits Rs 2550 and sustains above that level. After it breaks Rs 2,800 level, investors should raise their trailing stop loss by Rs 150 to Rs 2650.
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