BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Hero MotoCorp Ltd. launched its first co-developed product with Harley Davidson – ‘X440' – at CIT Jaipur. This marks Hero MotoCorp's entry into more than 400cc category where it had no presence earlier.
The X440 retains the retro look of Harley Davidson bikes and comes with three variants: Denim, Vivid and S.
Ex-showroom price ranges between Rs 2.29 lakh and 2.69 lakh. It will be produced at Hero MotoCorp's Neemrana plant and would be retailed through Harley Davidson's dealer network across the country.
Features
Harley Davidson X440 will be powered by 440CC oil-cooled BS6-II and E20 compliant engine, a first for Hero MotoCorp. It comes with an assist and slipper clutch that typically helps the bike to remain in control under hard braking conditions. This engine is mated to a six-speed transmission, which offers the best of both worlds (highway cruising and relaxed city commuting).
It has a commanding driving position that helps the rider during long rides and its flat-seat profile augments pillion comfort. It is available in dual channel anti-lock braking system version only with a combination of 18” front and 17” rear wheels.
The X440 also hosts a 3.5” TFT digital display with all the latest features such as driver alerts, bluetooth-enabled turn-by-turn navigation, etc.
Competition
The average industry size of domestic more than 350CC category was 65.5k units/month as of FY23. This implied ~5% share of the overall domestic two-wheeler industry. Within this, Royal Enfield commanded ~93% share, followed by Honda Motorcycle and Scooter India (~4%) and Bajaj Auto Ltd. (2%).
Harley Davidson X440 would rival the likes of RE Classic 350 (sales of 26.2 lakh units per month) and Hunter 350 (sales of 15.9 lakh units per month). While the Harley Davidson X440 costs 13% more than the RE Classic 350, it also boasts a larger 440CC engine.
View on the product
Harley Davidson X440's starting price of Rs 2.29 lakh is very aggressive and it looks like a credible product from Harley brand. While we await real world feedback for the product, it ticks all the right boxes on paper to make it successful. This platform will also have a different product under Hero brand later during the year.
Valuation and view:
Two-wheeler demand recovery in the domestic market is expected to sustain on a low base, led by healthy recovery in the urban market and gradual recovery in the rural market. Hero MotoCorp is a pure play on the domestic two-wheeler industry and its core strength lies in the 100cc motorcycle segment. The company has low vulnerability to electric vehicles. Scooters account for just 8% of the company's volumes. Moreover, 100CC motorcycle, which is the core product of the company, is considered less prone to being disrupted by EVs.
We estimate its revenue/Ebitda/profit after tax to register a compound annual growth rate of 10%/16%/17% over FY23-25. Our estimates do not factor in any material ramp-up in scooters and premium motorcycles.
The stock currently trades at ~15.5 times/14.5 times FY24E/FY25E earnings per share.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.