At ₹4,783, Is Hero MotoCorp Limited (NSE:HEROMOTOCO) Worth Looking At Closely?

Hero MotoCorp Limited (NSE:HEROMOTOCO) led the NSEI gainers with a relatively large price hike in the past couple of weeks. The recent jump in the share price has meant that the company is trading at close to its 52-week high. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Hero MotoCorp’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Hero MotoCorp

What Is Hero MotoCorp Worth?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 29.46x is currently trading slightly below its industry peers’ ratio of 29.51x, which means if you buy Hero MotoCorp today, you’d be paying a decent price for it. And if you believe that Hero MotoCorp should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Hero MotoCorp’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Hero MotoCorp?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Hero MotoCorp's earnings over the next few years are expected to increase by 74%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in HEROMOTOCO’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at HEROMOTOCO? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on HEROMOTOCO, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for HEROMOTOCO, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that Hero MotoCorp has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Hero MotoCorp, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.