Buy This 2-Wheeler Stock For Dividend Yields Of Near 5% & Solid EV Growth

The stock of HeroMoto Corp has been languishing for sometime now. The shares recently have fallen to near 52-week lows, thus offering attractive opportunities for investors to enter the stock. Here are some reasons to buy the stock.

Clear outline on electric vehicles strategy

Recently, Sharekhan did a report on the strategy of the company in the electric vehicle's space. It believes that HeroMoto Corp roadmap for electric vehicle strategy is convincing, given its preparedness and investments in technology and strategic partnerships.

"The company has launched Vida brand for e-mobility solutions in March 2022 and expects its first mass EV product to be unveiled in July 2022. Besides its investments in Ather Energy, the company has set up an R&D centre in Germany and Jaipur and collaborated with Taiwan start-up Gogoro," the report said.

Reasonable valuations

The stock of HeroMoto Corp has fallen from levels of Rs 3086 to the current price of Rs 2280. At the current market price on the stock, the dividend yield is nearly 5%, considering the last year's dividend of Rs 105 per share. We believe that the company would continue to retain the same dividend in the year's to come. The stock is also trading at around times trailing EPS, which is rather cheap.

Inputs costs may see margin pressures

In the coming quarters the company may see some inputs costs pressure, which is also likely to be a problem for many companies even from the Nifty. The company has a market leadership and dominant position in the executive bike segment, which is unlikely to change. Sharekhan recently had a buy call on the stock with a price target of Rs 3210.

According to Sharekhan, HeroMoto Corp has strengthened its product portfolio in the scooters and premium bike segment through a slew of new launches in the past two years.

"Management remains committed to launch at least one product every year over the next four years. We expect new launches to help the company build and position its brand in the long run," the brokerage has said.

The stock of HeroMoto Corp was last seen trading at Rs 2285 on the NSE.

Disclaimer

Investing in equities poses a risk of financial losses and investors should understand the nature of the risk. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.