Hero shares crossed the ₹4,000 level on December 26 for the first time after September 2017 amid the run-up in recent weeks. “Hero MotoCorp is breaking out after 6.3 years of consolidation and the breakout point is ₹4,050,” said Dharan Shah, founder of Tradonomy, a Mumbai-based investment research advisor, which has set a price target of ₹6,540 on the stock. “While Bajaj Auto is valued similarly to it, Hero MotoCorp on technical trend looks set to move higher right now.”
Hero MotoCorp is trading at a PE ratio of 24.19 times, while Bajaj Auto is at 29.51 times. Hero shares have gained 10.8% in the past five trading sessions and 43.3% in the past six months. The Nifty Auto rose about 5% in the past week and 24% in the past six months.
“We believe the shares of Hero MotoCorp have further upside potential, given that they have upgraded their target segment for 125cc vehicles to over 150cc segment, which has worked out well for the company,” said KS Maurya, AVP Research-Choice Institutional Equity. “Also, the reduction in raw materials has helped in improved margins for them, which can also be passed on to the customer to gain market share.”
Agencies“After a promising uptrend rally on daily and weekly charts, the stock is holding breakout continuation formation which is largely positive,” said Amol Athawale, deputy VP of technical research at Kotak Securities. “Technically, medium-term texture of the stock is positive but due to temporary overbought conditions, we could see range-bound action shortly.” Athawale expects immediate resistance at ₹4,300 for stock, and support at ₹3,800 levels.
