Hero MotoCorp sheds 5%; Jefferies downgrades stock, sees 14% downside risk

Hero MotoCorp share price falls over 5 per cent following reports that foreign brokerage firm Jefferies downgraded stock to 'Underperform' with a downside target of ₹4,950 per share.

Hero MotoCorp share price today: Hero MotoCorp share price fell over 5 per cent in Thursday's session on high volume. The scrip declined as much as 5.23 per cent to the day's low of ₹5,513 apiece, its lowest level since November 14.  Hero MotoCorp stock was trading 1.63 percent lower at ₹5,722 apiece as of 12:28 p.m., compared to 0.24 percent advance in the NSE Nifty 50 index.  The counter has seen 73.2 million shares change hands on the National Stock Exchange (NSE) so far on Thursday. Its market-cap was at ₹1.14 trillion as of 12:33 p.m.  The stock has been under pressure after scaling a fresh high earlier this month. Hero MotoCorp has declined 13.70 per cent from its 52-week high of ₹6,388.50, touched on December 5. On an year-to-date basis, the stock price, however, is up 6.44 per cent.  CATCH STOCK MARKET LIVE UPDATES TODAY 

Why Hero MotoCorp share price fell today?

   Hero MotoCorp share price declined in Thursday's session as Jefferies downgraded the stock. According to media reports, Jefferies downgraded the stock rating to 'Underperform' because it is concerned about the near-term trigger.  Hero MotoCorp's valuation is looking stretched, according to the global brokerage firm. The two-wheeler industry is still on a recovery phase after witnessing one of the worst decline in over a decade.  Moreover, recent demand boost because of a reduction in the Goods and Services Tax have faded earlier than expected, which further darkened the near-term outlook. Post GST 2.0 announcement, registration got a boost but it has turned flat on a year-on-year basis in November, according Jefferies.  Jefferies slashed the target price to ₹4,950 from ₹5,550 apiece. The current target price implies a downside risk of 13.5 per cent from current levels.  Jefferies believe that the recent rally in the stock price is largely valuation driven which is likely fizzling out. The brokerage firm, however, expressed optimism for the medium-term outlook of the Hero MotoCorp, suggest media reports.    Hero MotoCorp reported that its net profit increased 15.72 per cent year on year to ₹1,393.82 core in the second quarter of the current financial year from  ₹1,203.54 crore. Its revenue increased 15 per cent to ₹12,359.21 crore during July–September from ₹10,746.21 in the corresponding period of previous financial year.  Hero MotoCorp has recently launched a motorcycle for young riders. It launched DIRT.E K3 at an introductory price of ₹69 990. The motorcycle will target riders in the age group 4– 10 years, the company said in the exchange filing last week.