Kotak Inst retains 'reduce' rating on Hero MotoCorp

MUMBAI: Kotak Institutional Equities has maintained a reduce rating on shares of Hero MotoCorp as it believes that the stock is fairly valued.

The brokerage said volume growth for the company will remain challenging in the current financial year due to weak rural demand. Kotak Institutional has a target price of Rs 2,875 on the stock.

“EBITDA margin could decline by 100 bps from current levels over FY2017-19E. Hence, we estimate that the company’s earnings will grow only at a 6% CAGR over FY2017-19E,” the brokerage said in a note today.

Shares of the company fell 1% to Rs 2,869 as its March quarter numbers failed to enthuse investors.