Hero MotoCorp, Bajaj Auto shares hit 52-week high after JP Morgan raises target price

Shares of two-wheeler manufacturers Hero MotoCorp and Bajaj Auto hit a 52-week high after the brokerage firm JP Morgan revised the target price of the two-wheeler stocks, thus reflecting a positive outlook for the two-wheeler industry.

The share price of Hero MotoCorp surged as much as 4.7% to hit a 52-week high of ₹3,575 apiece on the BSE, whereas Bajaj Auto’s stock hit an all-time high of ₹5,945.80, following a surge of 3.3%.

The brokerage has maintained an 'overweight' rating on both stocks. JP Morgan raised the target price of Bajaj Auto from ₹6,100 to ₹6,400, whereas the target price for Hero MotoCorp has been revised from ₹3,500 to ₹3,750.

The revision in two-wheeler stocks by the brokerage firm is indicative of robust sales and profitability in the future.

Notably, despite a slump in sales over the past few months, analysts have remained bullish on two-wheeler stocks on the back of new product launches and premiumisation. According to brokerage firm KR Choksey analysts, Bajaj Auto’s strong growth in the 125 cc+ segment is leading to a better product mix and margins.

"Bajaj Auto has gained market share in the segment and is likely to see further gains due to new launches under the Pulsar brand and the 250cc+ segments of Triumph, Husqvarna and KTM," the brokerage firm says. The brokerage firm has recommended an 'Accumulate' rating for the stock, with a revised target price of ₹5,830.

Meanwhile, according to analysts at research firm Geojit, Hero MotoCorp, the country’s largest two-wheeler manufacturer, is expected to report strong earnings performance in the coming quarters on the back of new product launches in the 125 cc+ segment and premiumisation.

“We expect momentum in revenue growth to continue on the back of robust demand supported by festival season, strong order book, new launches and attractive product portfolio,” the brokerage firm says.

In the July to September quarter, the consolidated net profit of Bajaj Auto surged by 20% year-on-year o ₹1,836 crore in the July to September quarter, as against ₹1,530 crore in the same period last year. During the quarter under review, the revenue from operations stood at ₹10,777 crore, up 6%, underpinned by double-digit volume growth, with the sustained buoyancy on the domestic front cushioning the weak, albeit improving exports performance.

Hero MotoCorp reported a 47% year-on-year increase in profit after tax to ₹1,054 crore in the July to September quarter of FY24. During the quarter under review, the company’s revenue from operations grew by 4.1% to ₹9,445 crore as against ₹9,075 crore in the same period last year.