Sharekhan has given Buy recommendation for Hero MotoCorp with a target price of Rs. 3210 in its research report issued on May 04, 2022

Sharekhan’s research report on Hero MotoCorp

Q4FY22 results reported lower-than-expected EBITDA margin by 90 bps at 11.2%, due to a rise in other operating expenses. Hero is expected to benefit from premiumisation of its products, stronghold in the economy, executive motorcycle segments, aggressive products offerings in premium bike and scooters segments, and EV launches lined-up this year. Stock is trading at comfortable valuations at a P/E multiple of 13.1x and EV/EBITDA multiple of 6.7x its FY2024E estimates, with attractive dividend yield of 4.8%.

Outlook

We maintain a Buy on Hero MotoCorp Limited (Hero) with an unchanged PT of Rs. 3,210, led by expected recovery in rural, semi-urban demand and comfortable valuation.

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