Jefferies Lowers Ratings for Hero MotoCorp and Bajaj Auto, Sharp Cuts Price Targets
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Synopsis
On April 22, Jefferies downgraded Hero MotoCorp and Bajaj Auto, citing a dim outlook for the two-wheeler industry. Price targets were significantly reduced, reflecting concerns over future growth.
Key Takeaways
- Jefferies downgraded Hero MotoCorp to 'underperform'.
- Bajaj Auto has been rated 'hold'.
- Price target for Hero MotoCorp reduced by 37% to Rs 3,200.
- Price target for Bajaj Auto cut by 28% to Rs 7,500.
- Expected slower growth in the two-wheeler industry.
New Delhi, April 22 (NationPress) The global brokerage firm Jefferies has announced a downgrade for Hero MotoCorp and Bajaj Auto on Tuesday, attributing it to a pessimistic outlook for the two-wheeler sector in the upcoming years.
Hero MotoCorp is now rated as "underperform," while Bajaj Auto has been given a "hold" rating. Additionally, Jefferies has significantly reduced the price targets for both companies.
The price target for Hero MotoCorp has been adjusted downward by 37 per cent to Rs 3,200 from the previous Rs 5,075. For Bajaj Auto, the target has been cut by 28 per cent to Rs 7,500 from Rs 10,550.
According to Jefferies, the anticipated overall volume growth in the two-wheeler industry for FY26 and FY27 will be less robust than previously forecasted, prompting a reduction in growth estimates by six and two percentage points, respectively.
Despite this, a 10 per cent annual growth rate for the sector is expected between FY25 and FY28, as the firm pointed out notable changes in the competitive landscape of the two-wheeler market.
Jefferies has also revised earnings projections for Hero and Bajaj Auto downward by 11 per cent and 5 per cent, respectively, indicating that Hero MotoCorp's market share in the domestic arena has plummeted to a 20-year low.
Currently, among 44 analysts monitoring Bajaj Auto, 30 have issued a ‘buy’ rating, while seven analysts each hold a ‘hold’ or ‘sell’ perspective.
For Hero MotoCorp, out of 42 analysts, 25 recommend buying the stock, 10 suggest holding, and seven have rated it as a ‘sell’.
On Tuesday, shares of Bajaj Auto fell by 1.5 per cent to Rs 8,128, which is a 36 per cent decline from its peak of Rs 12,774 in 2024.
Hero MotoCorp shares also saw a decline of 2 per cent to Rs 3,840 during the intra-day trading, marking a 38 per cent drop from its peak of Rs 6,246 in 2024.
The report from Jefferies also highlighted a significant drop in Ola Electric's market share in the electric two-wheeler segment, which decreased from 49 per cent in Q1 FY25 to just 19 per cent in Q4.
