Harley Davidson X440 , collab with HERO

 

Hero Motocorp stock rating ‘Buy’: Premium venture with Harley Davidson X440 seen positive, re-rating possible

Hero Motocorp’s collaboration with Harley Davidson to launch X440 signals a strong entry into the premium market, analysts foresee potential stock re-rating.

Hero Motocorp’s collaboration with Harley Davidson to launch the all-new X440 in India will likely help the Indian two-wheeler major to become a strong contender in the premium segment, said Prabhudas Lilladher in a research note. Prabhudas Lilladher has maintained a ‘Buy’ rating on Hero Motocorp stock with a target price of Rs 3,200, implying a 6% upside. The target price is based on a 15x PE multiple of the Mar-25E standalone EPS. The recommendation is based on several key factors that make the Harley Davidson X440 a strong contender in the premium segment.

The bike boasts urban styling with distinctive signature elements, best-in-class performance, the allure of the Harley Davidson brand image, and competitive pricing. Hero Motocorp plans to capitalize on this success by launching another premium bike based on the same platform and engine family, with even more competitive pricing than the X440. This strategic move is expected to help Hero Motocorp gain a substantial share in the premium market.

However, the analysts also caution that successful execution of plans and strategies in the premium categories is crucial, considering Hero Motocorp’s previous experiences with product launches that did not achieve the desired success. The research note highlights the following key points about the Harley Davidson X440 and its potential impact on Hero Motocorp’s business prospects

Co-developed Harley Product: The Harley Davidson X440 is a result of collaboration between Hero MotoCorp and Harley Davidson, developed at Hero’s Center for Innovation and Technology with inputs from both companies’ tech centers. It will be manufactured at Hero Motocorp’s Garden factory in Rajasthan and is designed specifically for the Indian market. Hero Motocorp has ensured scalability of production based on demand and has the support of reliable suppliers.

Positive Surprise on Pricing: The X440 is available in three variants and has been competitively priced, below market expectations. With the allure of the Harley Davidson brand and appealing specifications, the bike has been favorably positioned in the premium motorcycle segment.

Strategic Distribution: The bike will be sold through Harley Davidson’s dealer networks and Hero’s premium exclusive stores, “Hero 2.0.” Hero Motocorp plans to expand the “Hero 2.0” network to nearly 100 stores by the end of FY24, ensuring wider availability and seamless service for the X440.

Impressive Engine & Transmission: The X440 is powered by a 440cc oil-cooled, long-stroke BSVI (OBD II) and E20 compliant engine, delivering 27 bhp of power and 38 Nm of torque. It features a 6-speed transmission for both highway cruising and city commuting, promising a smooth and powerful ride.

Iconic Features: The X440 boasts distinctive styling with all-metal body components, an iconic Harley Davidson exhaust note, and a robust structural chassis suitable for Indian roads. It comes equipped with front dual cartridge damping and rear gas-filled dual shock along with dual-channel ABS for enhanced safety.

Advanced Technology: The bike incorporates advanced technology features, including a 3.5″ speedometer with a TFT digital display offering day and night modes. The “S” variant comes with the ‘Connect 2.0’ feature, providing over 25 notifications on display through a mobile application, including turn-by-turn navigation, call alerts, and vehicle tracking.

Based on Prabhudas Lilladher’s test drive, the analysts find the Harley Davidson X440 quite impressive, capable of reaching speeds of over 100 kmph with minimal vibrations. They believe that the X440 poses a strong challenge to the current market leader in the premium segment and has the potential to achieve substantial sales volumes. Overall, with the successful launch of the X440 and potential for further premium offerings, Hero Motocorp’s business prospects are seen moving in the right direction, leading to a possible re-rating of the company’s stock, said the brokerage research note.