ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Railways
  • World
    • Economy
    • Politics
    • Markets
  • Survey
  • videos
  • photos
  • ZNAA'22
  • Trending News
    • Viral News
    • Travel
    • People
    • Entertainment
    • Sports
  • More ...
    • VIDEOS
    • PHOTOS
BREAKING NEWS
  • Whopping 1 lakh jobs on the cards in aviation and aeronautical manufacturing sector by 2024, says Minister
  • Money Guru: 10 funds for financial independence, this 15th August - details
  • India's forex reserves jump 60x since 1990s, surge 335 times since Independence | Check this data
  • India@100: Anil Singhvi predicts Nifty will reach 1,75,000 in next 25 years - Here's why
Read in App
Business News » India News

Is it worth investing in Hero Motocorp shares? Premium products, new launches and plant - This is what may power stock

Currently, Hero MotoCorp share price is affordable owing to the overall auto sectors subdued to downward performance in past few months. 

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Is it worth investing in Hero Motocorp shares? Premium products, new launches and plant - This is what may power stock
New launches, premium products, strong dealer network and new plant development in Andhra Pradesh will play major role. Photo: Reuters

On Friday, the Hero Motocorp shares were trading at Rs 2,590.70 per piece gradually down by 0.28% on Sensex at around 1331 hours. After rising by nearly 2%, the two-wheeler giant Hero MotoCorp gave away gains and ended at Rs 2,598.10 per piece up by Rs 24 or 0.93% on Thursday. Currently, Hero MotoCorp price is affordable owing to the overall auto sectors subdued to downward performance in past few months. However, there is potential in the company, going forward, as new launches, premium products, strong dealer network and new plant development in Andhra Pradesh will play major role. Interestingly, Hero is also expected to gain market share, after the price war dilemma created last year by Bajaj Auto when the latter slashed prices of their entry level motorcycle. Here’s what you can do with Hero MotoCorp shares!

Rishabh Kale, Research Analyst at Indsec Securities and Finance Ltd, listed out seven key factors for Hero Motocorp in upcoming fiscals. These are: 

Increase in market share after a price war with competitors: 

Bajaj Auto slashed prices of their entry level motorcycle in April 2018 in order to gain market share, leading to a potential price war between Bajaj Auto and HMCL.  This caused HMCL to lose some market share in the short term, but left no long term effect as competitors eventually felt the need to increase prices on back of rising input costs. HMCL market share in the entry level segment recovered from previous quarters and stood at 66% in Q4FY19. This shows the confidence of the customers in the brand and the loyalty towards the company.

Focus on Premium products: 

HMCL will be focusing on premium products with new launches in the 400cc segment. The company plans to follow a portfolio strategy launching motorcycles upto 400cc over a period of 3 years targeting various segments in this range, launching 1- 2 models on an annual basis. This year the company has launched Xpulse and the Xtreme 200S. Including these, it currently has 4 models in the premium segment 1)Xtreme200R, 2)Xtreme 200S 3) Xpulse200T and 4) Xpulse 200.

Dedicated corner for premium products: 

HMCL plans to upgrade their existing dealership and setup a dedicated corner where customers can experience premium products. 

New launches in the fastest growing 125cc scooter segment: 

To follow up on the huge success of the recently launched Destini 125cc, HMCL introduced Maestro Edge 125cc to cater to the increased demand in the 125cc segment. This segment grew by 56% in FY19, and as per the management there is a shift in demand to 125cc scooter from the traditional 100-110cc.

New Plant in Andhra Pradesh to be commissioned from H2 FY20: 

With a total of 7 plants, 5 in India and 2 overseas, HMCL will commission (estimated from H2FY19) one more plant in India at Chittoor District in Andhra Pradesh (AP). This will take the overall capacity to 10 mn units per annum. The AP plant setup will reduce logistics costs, as all 5 units are placed in North India with no plants in South. With the launches of premium bikes which are mostly an urban product, the proximity of the AP plant to key metro cities would help HMCL cater to these markets with ease. 

Strong dealer network:

HMCL has a total of 6600 touch points across India which includes service centers, dealers etc. Out of these ~1000 are dealership, the balance being a mix of service station, sub dealers, workshops etc.

Comparison between urban and rural growth:

Urban demand is currently ahead of rural, although it has seen a slowdown due to increase in cost and liquidity crunch in the economy. Rural demand is expected to pick up on back of a favorable monsoon. The management expects H1FY20 to be flattish, although demand is expected to pick up in H2FY20 on back of festive season, as well as pre-buying before BSVI transition. 

What can you do with the two-wheeler makers stock?

Kale says, “ the stock currently trades at 15.6x/15.2x its FY20E/21E consensus estimates. We feel the current valuations are relatively cheap owing to the downtrend in the auto industry. The introduction of new products in the premium segment, capacity expansion , pre-buying before BSVI and a good product mix augur well for HMCL. The current political stability in India, coupled with an expected increase in rural income make HMCL a major beneficiary in the two-wheeler segment. Further, SIAM is expected to submit a proposal for reduction of GST (currently 28%) which could give the realizations and margins an additional fillip. In such a scenario HMCL is well placed given its heavy market share (>50 %) to benefit from any potential opportunity. Hence, we hold a positive view on the stock.”

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Hero MotoCorpHero MotoCorp share priceSensexNiftyStocks to buy
Written By: ZeeBiz WebTeam
Updated: Fri, Jun 28, 2019
01:34 pm
Mumbai, ZeeBiz WebDesk
RELATED NEWS
Super Splendor 125 Canvas Black Edition launched in 2 variants; Check price, specs, features Super Splendor 125 Canvas Black Edition launched in 2 variants; Check price, specs, features
Two-wheeler maker Hero MotoCorp sales up 3% in June at 4,84,867 units Two-wheeler maker Hero MotoCorp sales up 3% in June at 4,84,867 units
Auto Sector may see double digit Growth in FY23; This analyst recommends Bajaj Auto, Hero Motocorp, others Auto Sector may see double digit Growth in FY23; This analyst recommends Bajaj Auto, Hero Motocorp, others
Hero MotoCorp to revise prices of motorcycles and scooters from this date Hero MotoCorp to revise prices of motorcycles and scooters from this date
Life Insurance Corporation ups stake in Hero MotoCorp, HUL, Capri Global Life Insurance Corporation ups stake in Hero MotoCorp, HUL, Capri Global

LATEST NEWS

Oil prices retreat amid talks to revive Iran accord; Brent crude at $96.38/bbl

Watcho App: Watch in Hindi ‘Welcome 2 Life’ and ‘Kairos’; 34 K-Drama, new episodes daily

Burger King's shocker to its customers: Company sending blank order email receipt, but why?

India@100: Anil Singhvi predicts Nifty will reach 1,75,000 in next 25 years - Here's why

Nitish Kumar snaps ties with BJP again, resigns as Chief Minister of Bihar

Stock Markets: REVEALED! Why world economies fearing recession but India is emerging even stronger

This company plans offline presence expansion; to hire 1100 people

Apple iPhone 14 launch in September - Check latest updates, release date, price, specifications and more

Apple iPhone 14 launch - Color options for all iPhone models leaked! Check release date, price and more

Har Ghar Tiranga campaign: India Post delivering National Flag for FREE; Steps to buy Tricolour online at ePostoffice portal

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
© 2022. India Dot Com Private Limited. All Rights Reserved.
LIVE TV