Jefferies downgrades Hero Moto, Bajaj Auto but maintains ‘buy’ on Eicher, TVS Motor
India's two-wheeler industry may be in for sluggish year as volumes are likely to fall, according to international brokerage Jefferies, which has downgraded leaders Bajaj Auto and Hero Moto and lowered its target price for the shares of both the companies.
The brokerage has revised its two-wheeler volume growth estimate for FY26/FY27, reducing them by 6 percentage points and 2 percentage points, respectively, however, it is still predicting a 10 percent CAGR over between FY25 and FY28.
Jefferies downgraded Bajaj Auto to ‘hold’ from its previous ‘buy’ rating, significantly cutting the target price to Rs 7,500 from Rs 10,550 per share. Hero Moto received a double downgrade and is now rated ‘underperform’ from earlier ‘buy’ rating, with the price target cut from Rs 5,075 to Rs 3,200.
On the other hand, Jefferies maintained its ‘buy’ on TVS Motors, raising its target to Rs 3,225 from Rs 3,050 earlier and on Eicher Motors, for which, the target has been revised higher to Rs 6,700 from Rs 6,600 earlier.
India's two-wheeler makers has undergone significant shifts, with TVS Motors achieving its largest market share in 18 years and exports reaching new highs. On the other hand, Hero Moto's market share in the domestic market has fallen to a 20-year low, the Jefferies note said.
Jefferies also lowered its Earnings Per Share (EPS) estimates for FY 26-27 by 5 percent for Bajaj Auto, 11 percent for Hero Moto, and 2-3 percent for TVS Motor, and shared an assumption of an industry growth of 8 percent in FY26 and 11 percent in FY27 and FY28, respectively.
At 3:15 pm, shares of Bajaj Auto dropped 1.4 percent, reflecting a large decline from its 2024 peak of Rs 12,774. Hero MotoCorp's stock fell 2 percent while shares of TVS Motor were higher by 0.3 percent. Eicher Motors stock price was trading lower by 0.4 percent on the NSE.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.