WebSify
Follow us on
Mail
Print

BofA downgrades Hero MotoCorp; cuts target price

Source : REUTERS
Last Updated: Tue, Dec 04, 2012 06:24 hrs
Employees work in an assembly line at Hero Honda's newly inaugurated plant in Haridwar

Bank of America Merrill Lynch downgrades Hero MotoCorp to "underperform" from "buy" and cuts its target price to 1,650 rupees from 1,980 rupees.

The bank expects the company's domestic sales to remain muted and in 'single digits.' This is primarily due to heavy dependence on 100cc bikes where better options are available with competitors, and likely structural shift to 150cc plus premium bikes where the "company's franchise is weak".

"We cut our export assumptions by 40 percent/year to factor in the six-month delay in its overseas foray," BofA said in a note.

It expects Hero MotoCorp's margin expansion to be muted, cuts EBITDA margin assumptions by 70bp/year to 11.4/13.1 percent to factor peer pressures, and rupee weakness that will hurt imports.

At 10:57 a.m., shares were down 0.78 percent at 1,807 rupees.




blog comments powered by Disqus
most popular on facebook
talking point on sify finance