Hero MotoCorp hits 11-week high; stock rallies 5%

The stock rallied 5% to Rs 3,195 trading at its highest level since September 24, 2018, on the BSE.

Shares of Hero MotoCorp hit an 11-week high of Rs 3,195 apiece, up 5% on the BSE on the back of heavy volumes, over the expectations of pick up demand in the rural market.

The stock world’s largest two-wheeler manufacturer was the top gainer among Sensex and Nifty 50 stocks. It was trading at its highest level since September 24, 2018, on the BSE.

The auto industry witnessed conservative sales off-take during the previous couple of months owing to issues like increase in insurance costs before the festive season and overall low key market sentiment. However, sales picked up in the last few days of the festive season, Hero MotoCorp said during the announcement of November sales numbers.

During the month, the company commenced nationwide retail sales of its new 125cc scooter, the Destini 125, country’s first and only scooter to feature an idle start-stop system.

Thus far in the month of December, the stock has outperformed the market by gaining 4.5%, as compared to 2% decline in the S&P BSE Sensex.

According to analyst, Hero MotoCorp has triggers to growth from entry into higher capacity motorcycles, 125cc scooters and new export markets.

“The rural market has still decent demand and picking up in last 3-4 months. It would continue to outpace the urban market on the back of higher agri income. Record high crop production and higher minimum support prices (MSP) are the key booster for rural income and rural spending. We believe that government’s continuous efforts to boost rural economy and regional disparity in penetration (North and Eastern region growing strongly) would result in healthy two-wheeler volumes in FY19,” Reliance Securities said in November report.

Moreover, the company’s strong product line up in scooters and premium bike segment would bring additional volumes for the company, the brokerage firm said.

At 11:04 am; Hero MotoCorp was trading 5% higher at Rs 3,186, as compared to a 1% rise in the S&P BSE Sensex. The trading volumes on the counter jumped 1.5 times with a combined 807,843 equity shares changed hands on the BSE and NSE so far.