Major news has broken in the auto sector today, with two prominent companies experiencing significant stock downgrades. Jefferies brokerage has reduced its target price for Hero MotoCorp and Bajaj Auto shares by as much as 37%. Furthermore, their ratings have also been lowered, delivering a substantial blow to investors. Let's delve into the details:
Bajaj Auto (Bajaj Auto): Target Price Reduced by 28% to ₹7,500
Jefferies has downgraded Bajaj Auto's rating from "BUY" to "HOLD," simultaneously reducing the target price from ₹10,550 to ₹7,500. Bajaj Auto's share is currently trading 35% below its previous high, and its share price has declined by 7.68% over the past year.
Bajaj Auto Stock Key Highlights:
- 52-week High: ₹12,772.15
- 52-week Low: ₹7,088.25
- 1 Year Decline: 7.68%
Hero MotoCorp (Hero MotoCorp): Target Price Reduced to ₹3,200
Hero MotoCorp has suffered an even more significant setback. Jefferies has slashed its target price by 37%, from ₹5,075 to ₹3,200. Additionally, a double downgrade has been implemented, reducing the rating from "BUY" to "Under Perform."
Hero MotoCorp Stock Key Highlights:
- Target Price: ₹3,200
- Previous Target: ₹5,075
- Rating Downgrade: BUY → Under Perform
Reasons for the Downgrade
Jefferies cited a reduction in its volume growth estimates for the two-wheeler industry by 6% and 2% for fiscal years 2026 and 2027, respectively. Furthermore, the competitive outlook in India's two-wheeler industry has shifted, with TVS Motors achieving an 18-year high in market share. Conversely, Hero MotoCorp's domestic market share has fallen to its lowest level in 20 years.
TVS Motor and Eicher Motors Maintain "BUY" Rating
Despite the downgrades for Bajaj Auto and Hero MotoCorp, Jefferies has maintained its "BUY" rating for TVS Motor and Eicher Motors. Jefferies raised its target price for TVS Motor from ₹3,050 to ₹3,225 and for Eicher Motors from ₹6,600 to ₹6,700.
TVS Motor and Eicher Motors Key Highlights:
- TVS Motor Target: ₹3,225
- Eicher Motors Target: ₹6,700
- Growth Estimate: 8% (FY 2026), 11% (FY 2027 & 2028)
Investor Recommendation
If you hold shares in Hero MotoCorp or Bajaj Auto, the rating downgrades and target price reductions by Jefferies are significant factors to consider. Given the volatility in these companies' shares, consulting a financial advisor before making any investment decisions is bly recommended.
