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Prabhudas Lilladher Report
Launch of Harley-Davidson X440 in India within three years of collaboration marks a significant milestone for Hero MotoCorp Ltd. and Harley-Davidson itself. The bike commands good road presence and is a strong contender in premium segment given-
its urban styling plus distinctive signature elements,
best-in-class performance,
Harley-Davidson brand image and
competitive pricing.
Hero MotoCorp plans to launch another premium bike based on the same platform and engine family. Hero branding bike will have more competitive pricing compared to X440 and would also benefit from association with Harley-Davidson brand image, thereby, helping to gain substantial share in the premium market, in our view.
However, we have also seen Hero MotoCorp's good product launches who failed to find success in the market. Thus, successful execution of plans and strategies in premium categories is critical.
We believe that Hero MotoCorp is moving in the right direction and re-rating is possible if it can make in-roads in premium segment. The company trades at 15 times price-to-earning multiple, more than 30% discount versus its peers' average.
Performance of X440 could act as overhang for Eicher Motor's stock performance, which could be the biggest loser from success of X440.
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