Hero MotoCorp share price closed higher in trade today after Kotak Securities upgraded the large cap stock to an "add" from a "sell". Share price of Hero MotoCorp ended 3.09% or Rs 55 higher at Rs 1,839.15 compared to the previous close of Rs 1,784 on BSE.
The brokerage firm gave a target of Rs 2,150, a 20 percent upside from the current market price. The large cap stock has gained after three days of consecutive fall. Earlier in the day, the stock touched an intraday high of Rs 1901.9, a rise of 6.61%.
The market cap of two-wheeler firm rose to Rs 36,078 crore.
The stock has lost 25% since the beginning of this year and fallen 33% during the last one year. During last one month, the stock has lost 19.49%.
"We upgrade the stock to 'add' from 'sell' on attractive valuations (11 times FY2022E core EPS). While the catalysts for near- term growth are absent due to impact on consumption because of Covid-19 and shift to BS-VI norms from April 2020, we believe growth will resume for the company from the second half of FY21 led by revival in rural demand," Kotak said.
However, Kotak cut the earnings estimates for the stock expecting falling volume and profitability in the wake of the coronavirus outbreak.
"We have cut our earnings estimates by 9-13 percent for FY2021-22E due to cut in our volume estimates and profitability due to concerns on Covid-19 outbreak and a sharp rise in costs related to BS-VI norms," Kotak said.
The company had reported a 19.27 percent decline in sales at 4,98,242 units in February.The two-wheeler manufacturer reported a 14 per cent year-on-year rise in its standalone profit in Q3. Against net profit of Rs 880.41 crore in Q3, the auto major posted a net profit of Rs 769.10 crore in same quarter last year.
Profit before tax (PBT) stood at Rs 1,012 crore as compared to Rs 1,138 crore in Q3 FY19. On consolidated basis, the company's revenue and PAT stood at Rs 7,075 crore and Rs 905 crore, respectively for the quarter.