Hero MotoCorp announces five year warranty on all its two-wheelers - Angel Broking

In a major marketing initiative, Hero MotorCorp (HMCL) has announced a warranty of five years on all its models. The warranty will be of five years or 70,000km on motorcycles, whichever is earlier and five years or 50,000km on scooters, whichever is earlier. With this initiative, HMCL has become the first manufacturer in the country to offer this benefit.

We see this as a positive announcement by HMCL and believe that it will provide a slight edge to the company over its competitors. Further, considering the increasing competitive intensity in the two-wheeler industry, an assurance of such a kind should strengthen the company's brand and attract and retain customers going ahead in FY2014.

At Rs. 1,451, the stock is attractively trading at 10.3x FY2015E earnings. We maintain our Buy rating on the stock with a target price of Rs. 1,824.

Source : Equity Bulls

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