Hero motor: Upside vs Downside

Hero motors seen in monthly time frame shows head-and-shoulders pattern with head on top

Keeping all viewpoints in mind, Hero motor has upside till 3000/- (given optimistic picture of the economy), which is 200 rupees from here—and downside till 2000/- which is 800 rupees from here, given reducing margins and decline in quarterly sales (24% decline, as seen over last quarter).

Risk to reward ratio is 200:800 rupees (1:4)

Morgan Stanley and Goldman Sachs are underweight on Hero motor, with similar targets.

The 110cc bike sector is under more stress than premium-end automobiles, since inflation hits the common man more.

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