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Key Points

Global brokerage Jefferies has significantly downgraded Hero MotoCorp and Bajaj Auto, reflecting growing challenges in the two-wheeler market. The firm slashed price targets by 37% and 28% respectively, highlighting a more cautious outlook for the sector. Despite expecting a 10% annual growth rate between FY25 and FY28, Jefferies noted shifting competitive dynamics and reduced market shares. The downgrades come amid declining stock performances, with both companies experiencing substantial drops from their 2024 peaks.

Key Points: Jefferies Cuts Hero MotoCorp Bajaj Auto Targets Amid Industry Slowdown

  • Jefferies reduces Hero MotoCorp price target to Rs 3,200
  • Bajaj Auto target cut to Rs 7,500
  • Two-wheeler sector expected 10% annual growth from FY25-FY28
  • Market shares declining for key players
2 min read

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

Global brokerage downgrades two-wheeler giants, slashes price targets by 37% and 28%, citing weak industry outlook and market challenges

"Competitive dynamics in the two-wheeler industry have significantly shifted - Jefferies Research Report"

New Delhi, April 22

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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Reader Comments

R
Rahul K.
Ouch! That's a massive downgrade for Hero. I've been holding their stock for years but this makes me nervous. Might be time to reconsider my portfolio allocation. 😬
P
Priya M.
Interesting analysis but I think Jefferies might be too pessimistic. The EV transition is creating short-term turbulence but these are solid companies with strong brand value.
A
Arjun S.
The Ola Electric market share drop is the real story here! From 49% to 19% in just a year shows how competitive the EV space has become. Traditional players might actually benefit from this.
S
Sanjay T.
Respectfully disagree with the downgrade. Hero's rural distribution network is unmatched and they're making smart moves in EVs. This could be a buying opportunity for long-term investors.
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Neha P.
Bajaj Auto at least has the 'hold' rating. Their international business might help cushion the domestic slowdown. Still, 28% price target cut is brutal!
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Vikram J.
The article could have included more about what specific factors led to these downgrades. Is it just market share loss or are there deeper structural issues? Would appreciate more analysis.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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