BofA downgrades Hero MotoCorp

Cuts target to Rs 1,650 on expectation of muted domestic sales

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Reuters Mumbai
Last Updated : Jan 24 2013 | 2:10 AM IST

Bank of America Merrill Lynch downgrades Hero MotoCorp to "underperform" from "buy" and cuts its target price to Rs 1,650 from Rs 1,980.

The bank expects the company's domestic sales to remain muted and in 'single digits.' This is primarily due to heavy dependence on 100cc bikes where better options are available with competitors, and likely structural shift to 150cc plus premium bikes where the "company's franchise is weak".

"We cut our export assumptions by 40% per year to factor in the six-month delay in its overseas foray," BofA said in a note.

It expects Hero MotoCorp's margin expansion to be muted, cuts EBITDA margin assumptions by 70bp per year to 11.4/13.1% to factor peer pressures, and rupee weakness that will hurt imports.

At 10:57 am, shares were down 0.78% at Rs 1,807.

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First Published: Dec 04 2012 | 11:28 AM IST

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