MARKET EYE-BoFA downgrades Hero MotoCorp; cuts target to 1,650 rupees
* Bank of America Merrill Lynch downgrades Hero MotoCorp to "underperform" from "buy" and cuts its target price to 1,650 rupees from 1,980 rupees. * The bank expects the company's domestic sales to remain muted and in 'single digits.' This is primarily due to heavy dependence on 100cc bikes where better options are available with competitors, and likely structural shift to 150cc plus premium bikes where the "company's franchise is weak". * "We cut our export assumptions by 40 percent/year to factor in the six-month delay in its overseas foray," BofA said in a note. * It expects Hero MotoCorp's margin expansion to be muted, cuts EBITDA margin assumptions by 70bp/year to 11.4/13.1 percent to factor peer pressures, and rupee weakness that will hurt imports. * At 0436 GMT, shares were down 0.72 percent at 1,808.05 rupees. (email@example.com)
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