Broker’s Call: Hero MotoCorp (Buy)

Why It Matters

The upbeat earnings and strong growth outlook position Hero MotoCorp as a compelling play in India’s two‑wheel market, especially as rural demand resurges and EV initiatives expand.

Key Takeaways

• Q3 FY26 profit beats estimates, driven by other income.
• Expected 7% volume CAGR through FY28, powered by new launches.
• Rural market recovery boosts 100‑110 cc bike demand.
• EV segment ramp-up not eroding margins.
• Stock valued at ~18‑20× EPS, target ₹6,804.

Pulse Analysis

Hero MotoCorp (HMCL) continues to dominate India’s commuter‑bike segment, leveraging its deep brand equity in the 100‑110 cc space. The latest quarter’s profit of ₹14.4 billion, slightly ahead of consensus, was buoyed by ancillary income streams, while core operating margins remained flat despite the company’s nascent electric‑vehicle (EV) push. This resilience signals that HMCL can integrate EV technology without sacrificing profitability, a critical factor as regulators and consumers increasingly favor cleaner mobility solutions.

A key catalyst for the next few years is the revival of rural demand. A favorable monsoon, improved terms of trade for farmers, the upcoming 8th pay commission and a robust marriage season are expected to lift discretionary spending on two‑wheelers. Combined with HMCL’s refreshed product lineup and an aggressive export strategy, analysts forecast a 7% compound annual growth rate in volumes through FY28, translating into double‑digit revenue, EBITDA and profit growth. The company’s focus on entry‑level models aligns with the purchasing power of rural consumers, positioning it to capture market share from weaker competitors.

From an investment perspective, the stock trades at roughly 19.7× FY27 and 17.9× FY28 earnings, well below peers with similar growth trajectories. Motilal Oswal’s target price of ₹6,804 incorporates a 20× FY27E EPS multiple and a 20% discount for the holding‑company structure, reflecting confidence in sustained earnings expansion. While execution risks in the EV segment and macro‑economic headwinds remain, the combination of stable margins, rural market tailwinds, and attractive valuation makes Hero MotoCorp a noteworthy candidate for growth‑oriented portfolios.

Broker’s call: Hero MotoCorp (Buy)

Motilal Oswal · Updated · February 9 2026 at 07:09 PM

Target: ₹6,804

Current Market Price (CMP): ₹5,755.20

Hero MotoCorp’s (HMCL) 3QFY26 PAT of ₹14.4 billion came in slightly above our estimate of ₹1,360 crore, largely due to higher other income. Margins remained stable year‑on‑year despite the ramp‑up in its EV business.

We expect HMCL to deliver a volume CAGR of about 7 % over FY25‑28, driven by new launches and a ramp‑up in exports. HMCL will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments. We project a CAGR of about 10 % / 11 % / 12 % in revenue/EBITDA/PAT over FY25‑28.

Rural sentiment is favourable on the back of a healthy monsoon and positive terms of trade for farmers. Management has indicated that it is seeing a gradual recovery in rural markets currently. Given that HMCL has a dominant 100‑110 cc portfolio, any recovery in the rural region bodes well for the company. Incremental positives for entry‑level demand include a healthy marriage season from Q4 onward and the upcoming 8th pay commission. With its refreshed product portfolio, we expect HMCL to outperform the scooter segment, albeit over a low base.

At about 19.7× / 17.9× FY27E/28E EPS, the stock appears attractively valued. We reiterate our Buy rating with a TP of ₹6,804 (based on 20× Dec’27E EPS + ₹91/₹423 for Hero FinCorp/Ather after a 20 % hold‑co discount).