Hero MotoCorp may ride on to bumpy road, muted demand may impact revenue

Higher inventory levels, muted sales volumes could cap growth rates ahead

The stock of Hero MotoCorp is down over 5 per cent over the last week on worries that muted demand and rising competitive intensity will impact revenues as well as margins. A slew of brokerages have downgraded the stock, given the headwinds faced by the sector as well as the largest two-wheeler maker. 

Most analysts are worried that higher pricing pressure especially in the entry-level motorcycles, which accounts for a third of Hero’s volumes, would force the company to initiate price cuts aggravating the situation. Analysts at Reliance Securities say that the market share fall witnessed by the company could force