On Thursday, the share price target for Hero MotoCorp Ltd. (HMCL:IN) shares was raised to INR4,000 from INR3,950 by a Kotak analyst, who also maintained a Sell rating on the stock.
This adjustment comes despite the analyst's reduction in EBITDA estimates for the fiscal years 2025 to 2027 by 1-3% due to anticipated lower average selling prices and gross margin assumptions.
The analyst predicts that the domestic two-wheeler industry will sustain its growth into FY2025, which should benefit Hero MotoCorp. However, expectations for significant volume increases from most of the company’s new premium motorcycle and scooter launches are tempered. The Xtreme 125 model is expected to see a slight rise in volumes.
Hero MotoCorp anticipates that demand for its new products will grow in the upcoming months, supported by marketing initiatives and the expansion of premium dealerships. Despite these efforts, the analyst believes that the company's market share gains will be limited due to its relatively weak brand positioning in the competitive landscape.
In the electric vehicle (EV) scooter segment, the analyst notes that Hero MotoCorp is trailing behind its competitors. The company's position in this rapidly growing market segment appears to be less favorable as it struggles to catch up with other players who are currently leading the EV race.
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