Hero Motors shares hit 20% upper circuit after lackluster debut. Should you buy, sell or hold?
Hero Motors shares staged a dramatic recovery on Wednesday, surging 20% to hit the upper circuit at Rs 98.40 after listing at a 2% discount at Rs 82. Despite strong IPO demand, analysts recommend holding existing shares with a stop-loss or waiting for price consolidation before taking fresh positions.
Hero Motors shares jumped 20% to reach the upper circuit following a weak debut in the market. The company listed at Rs 82 per share, which was 2% lower than its IPO price of Rs 84. Despite the poor start, the stock managed to stay in the upper circuit at Rs 98.40 after the initial dip. The IPO attracted significant investor interest, being subscribed nearly seven times its offer size, with non-institutional investors (NII) and retail investors showing even higher subscription rates.
The company raised Rs 1,000 crore through the IPO, with Rs 600 crore coming from a fresh issue and Rs 400 crore from an offer for sale by existing shareholders. Analysts advise investors to exercise patience before taking fresh positions, as Hero Motors' current valuation appears high compared to its peers. While the company shows growth potential in the EV sector, its price-to-earnings ratio stands at around 69-74x, notably higher than the industry average of 50.2x.
Analysts believe that Hero Motors' return on net worth (RoNW) and earnings before interest, tax, depreciation, and amortization (EBITDA) margin are below industry benchmarks, and the company's customer concentration poses an additional risk. Until better valuation or price consolidation is observed, the post-listing view on Hero Motors shares is Neutral, suggesting investors should hold their positions with a stop-loss around Rs 75 to Rs 77.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
