Hero MotoCorp shares continued to decline for a fifth straight session to hit a 52-week low on Monday. In afternoon deals, the Hero MotoCorp stock was down 0.65 percent at Rs 2,754 on BSE after hitting a 52-week low of Rs 2,740.85.

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The stock underperformed the headline Sensex index, which was up 0.30 percent.

After the market hours on Thursday, the automobile marker had posted a 498 percent year-on-year (YoY) surge in net profit to Rs 365.4 crore for the June quarter. Its revenue from operations came in at Rs 5,487 crore, up 84.7 percent on a year-on-year basis.

Analysts in a CNBC-TV18 poll had estimated the company's quarterly net profit at Rs 402 crore.

Also read: Hero MotoCorp Q1 profit spikes 498% YoY to Rs 365.4 crore, misses Street estimates

Here's what brokerage said after the company's earnings announcement:

Nomura

The brokerage has lowered its target PE multiple on Hero MotoCorp to 14x from 15x. The execution on electric models will be a key monitorable for any rerating, according to Nomura, which has retained a 'neutral' rating on the stock with a target price of Rs 3,171.

UBS

The company's June quarter performance missed estimates, said the brokerage, which has maintained a 'buy' rating on the stock with a target price of Rs 3,600. However, the auto maker's inventory is not at alarming levels, and it is expected to build stock ahead of the festive season, said UBS.

HDFC Securities Institutional Research

The brokerage said HeroMotoCorp's quarterly PAT was below its estimates, as the auto maker's margin declined to 9.4 percent. The demand environment is tepid, with sales at 80 percent of the pre-Covid level, and the company's management is hopeful of a recovery in H2, according to HDFC Securities Institutional Research.

Hero’s initiatives around premiumisation and electric vehicles are likely to benefit in the medium term, said the brokerage, which has maintained an 'add' rating on the stock with a revised target price of Rs 3,150. It has lowered its EPS estimates by around five percent to factor in the weak Q1 performance.

Motilal Oswal

The brokerage said Hero's Q1 performance was driven by efficient cost management despite high-cost inflation and operational deleverage. While the cost inflation is being managed reasonably well, demand recovery is the missing link in the story, according to Motilal Oswal, which has retained a 'buy' rating on the stock with a target price of Rs 3,400.

The brokerage has lowered its FY22E and FY23E EPS estimates EPS by five percent and one percent respectively, factoring in a delayed volume recovery. It also said that more than 90 percent of Hero MotoCorp's outlets are operating normally now, and retail is over 80 percent of pre-pandemic levels, and unlike last year, the pent-up demand is not that strong this year.

ICICI Securities

Hero MotoCorp's Q1 operating numbers missed estimates as the company's gross margins slipped with an increase in input cost pressure, said the brokerage. The automaker is witnessing demand pressures in the entry-level segment due to weak consumer sentiment while rising vehicle prices are

likely to further hurt consumer affordability.

The imminent electric vehicle product launch from the new-age challenger Ola Electric is likely to bring investors more clarity on the right-to-win of new-age companies in a two-wheelers-like matured business, according to ICICI Securities, which has retained an 'add' rating on the stock with a target price of Rs 2,965.

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