Hero MotoCorp Technical Analysis:
Hero MotoCorp Limited (HEROMOTOCO) share price looks strong in its technical chart. The counter is trading above its long and short-term moving average (50 DMA, 200 DMA) over the last week ended on 24th June 2022. The stock price crossed above its previous swing price of 2626 with a strong volume.
Momentum indicators – ADX and MACD – look strong on the daily chart. With broader market support, the share price will reach the 3000 level in a month and the 3500 level in a 3 to 6-month period. On the weekly chart, the stock has resistance at the 2750 level.
The stock is trading at 23 PE and 3.43 Price to book value. The sector PE is 107.05 and Price to book value is 5.57. This shows the potential of the stock to match the industry levels. Hero MotoCorp is a consistent dividend-paying company with a strong dividend yield of ~3.55%. One can buy stock to ride the auto-cycle for the short to medium term.
Hero MotoCorp share was identified at 2684 level on 23-06-2022 as a momentum stock. The stock closed at 2831 level on 07-07-2022 above its previous swing high of 2813 level with strong volume. The script has formed a cup and handle pattern and given breakout. This share is ready to move up further and can reach at least the 3000 level in the short term. Weekly trading volume is also strong with closing above its long-term average.
Hero MotoCorp Fundamental Analysis:
Hero MotoCorp Limited. is a large-cap company with a market cap of INR 53,431 crores and a face value of INR 2. The company is in the business of designing and developing technologically advanced motorcycles and scooters for customers around the world. It is the dominant market leader in India.
The company claims to be the world’s largest two-wheeler maker. The company holds over 50% share in the domestic motorcycle market in India. Hero MotoCorp sells its products in 42 countries across Asia, Africa, Latin America, and the Middle East.
Promoter’s holdings in the company remained 34.75 percent from March 2021 to March 2022. DII has increased its holdings in the company from 18.67% in March 2021 to 24.24 % in March 2022.
Hero MotoCorp Financial Analysis:
Return on capital employed is ~19 percent and return on equity is ~15 percent. This data reflects a strong valuation of this counter. Hero MotoCorp Limited’s total revenue remained flat over the last three years from INR 30,756.64 crore in FY 2020 to INR 30,106.29 crore in FY22. However, the net income of the company declined from INR 3,638.11crores in FY20 to INR 2,316.88crores in FY22. The decline of net income is mainly due to COVID lockdown and consequent slowdown in the global economy.
Nifty Auto Index
Fundamentally, this sector is now looking strong with a good monsoon that will boost the rural demand for two-wheelers. On the daily chart, Nifty Auto Index is moving higher with high highs and higher lows (Refer below chart). This symbolizes a bullish movement in the sector. Hero MotoCorp is one of the leading two-wheeler companies in India. The company has increased the price of its motorcycles and scooters by up to INR 3000 from 1st July 2022 to counter the increase in raw material prices.
The company is under the capable leadership of Dr. Pawan Munjal, Chairman, and CEO of the company. He has been in this position for over 21 consecutive years to date. Dr. Pawan Munjal is one of India’s renowned corporate leaders and champions of growth and technological innovations. Besides, he is also serving as a director on the board of a few other companies within the group and beyond.