*SMC Global Institutional Equities*
*Hero Motorcorp Ltd*
Link To Report:
*Result Update: Q2 FY20*
*CMP: INR 2,691*
*Target Price: INR 2,906*
*Up Side: 8%*
*Rating: Accumulate*
*Key Investment Rationale:*
· Festive led recovery underway, clarity on BS-6 yet to emerge
· Margins to remain in a tight band
*Valuations & View:*
HMCL continues to enjoy a strong market leadership in 2-Wheeler space despite facing multiple headwinds. However, concerns over current recovery, launch of BS-6 and inventory management remains a key concern. We have valued HMCL’s common stock using DCF and PE methodology by assigning (50:50 weightage). Our DCF target stands at INR 3,001/share and PE target stands at INR 2,812/share, by assigning 15x on FY21E EPS of INR 187.5, *hence we arrive at a target price of INR 2,906 and we assign an “ACCUMULATE” rating on the stock.*
*Research Analyst*
Ankit Merchant