Sares in Hero MotoCorp
Hero MotoCorp on Thursday reported an increase of 10 percent in its net profit for the April-June quarter, which lagged estimates.
CLSA downgrades the stock to "sell" from "under-perform" while retaining its target price at 1,950 rupees.
Removing the inventory build-up from Hero's January to June volumes means the two wheeler maker's growth would drop to 0 percent during this period, compared to the reported growth of 8 percent, CLSA said in its report.
"We fear that Hero will have to start heavy discounts and/or cut production in 2H if festival season demand is not strong, which could easily be the case," CLSA said.
India has a number of festivities in the second half of the year, including Diwali, in which auto makers introduce promotions to spur sales.