Jefferies downgrades Hero MotoCorp and Bajaj Auto, cuts price targets sharply

New Delhi, April 22 (IANS) Global brokerage firm Jefferies on Tuesday downgraded Hero MotoCorp and Bajaj Auto, citing a weak outlook for the two-wheeler industry in the coming years.

While Hero MotoCorp has been downgraded to "underperform", Bajaj Auto has been rated as "hold". Jefferies has also slashed the price targets of Hero and Bajaj Auto by a large margin.

The price target for Hero MotoCorp has been cut by 37 per cent to Rs 3,200 from the earlier Rs 5,075. For Bajaj Auto, the target has been reduced by 28 per cent to Rs 7,500 from Rs 10,550.

Jefferies believes the overall volume growth in the two-wheeler industry for FY26 and FY27 will be slower than expected, reducing its growth estimates by six and two percentage points, respectively.

Still, it expects a 10 per cent annual growth rate for the sector between FY25 and FY28, as it highlighted that the competitive dynamics in the two-wheeler industry have shifted.

Jefferies cut earnings estimates for Hero and Bajaj Auto by 11 per cent and 5 per cent, respectively, as Hero MotoCorp's market share in the domestic market has fallen to a 20-year low.

Currently, out of 44 analysts tracking Bajaj Auto, 30 have a ‘buy’ rating, while seven each have a ‘hold’ or ‘sell’ view.

For Hero MotoCorp, 25 out of 42 analysts have a ‘buy’ recommendation, 10 suggest holding the stock, and seven have a ‘sell’ rating.

On Tuesday, Bajaj Auto shares dropped 1.5 per cent to Rs 8,128, falling 36 per cent from its peak of Rs 12,774 in 2024.

Hero MotoCorp shares declined by 2 per cent to Rs 3,840 during the intra-day session, which is 38 per cent lower than its 2024 peak of Rs 6,246.

The Jefferies report also noted a sharp decline in Ola Electric’s dominance in the electric two-wheeler space. Its market share dropped from 49 per cent in Q1 FY25 to just 19 per cent in Q4, as per the note.

--IANS

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