Hero MotoCorp Poised for Major Surge: Buy Call Targets ₹6,205 Amid Multi-Segment Revival

Hero MotoCorp Poised for Major Surge: Buy Call Targets ₹6,205 Amid Multi-Segment Revival​

Motilal Oswal has reaffirmed a 'BUY' rating on Hero MotoCorp, projecting a highly optimistic growth trajectory for the two-wheeler giant. The research firm has set a target price (TP) of ₹6,205, reflecting an expected appreciation of 18% from the current market price of ₹5,247. The bullish outlook is underpinned by robust domestic demand, a sharp resurgence in electric vehicles (EVs), and significant export potential.

Resilient Domestic Demand and Core Segment Gains​

Demand for Hero MotoCorp's products has demonstrated resilience across key segments, particularly evident in the fourth quarter. The company reported that retail demand in March outpaced production, resulting in a notable reduction of dealer stock levels.

The 125cc motorcycle segment, in particular, has shown marked improvement following the launch of models like the new Glamour and Xtreme 125R. Similarly, the 100cc portfolio, anchored by the Splendor and HF Deluxe, remains a vital growth pillar, benefiting from rural recovery sentiments.

Crucially, the scooter segment has significantly outperformed industry growth. Motilal Oswal noted that Hero MotoCorp achieved a 28% Year-on-Year (YoY) growth in scooters, substantially outpacing the industry's 14.6% YoY growth over the period April to February.

Electric and Export Engines Drive Future Growth​

The company's future growth narrative is increasingly reliant on its performance in the EV and export markets. In the EV space, the Vida VX2 has garnered positive customer reception, aided by features like its removable battery for home charging.

Vida’s market presence has expanded significantly, boosting its market share from 4% in 4QFY25 to 11.1% by 4QFY26. Furthermore, Hero MotoCorp is actively increasing its capacity in EV 2Ws, aiming to double production to 30k per month by the end of March.

Exports are highlighted as a primary growth accelerator. The company posted 40% YoY growth in exports during FY26, boosting its contribution to 6% of total volumes. Key growth markets, including Colombia and Bangladesh, are fueling this international expansion.

Financial Projections and Near-Term Concerns​

Analysts project that the combination of rural revival, scooter momentum, and increased exports will drive the company's overall volume CAGR at approximately 7% over the fiscal years 2025-2028. This volume increase is expected to fuel an 11% CAGR in revenue, EBITDA, and PAT over the same period.

However, the report cautions that input costs pose a significant near-term risk. Key raw materials such as steel, aluminum, rubber, and plastics have experienced sharp price increases, leading to expected margin pressure. Despite implementing two price hikes in 4Q, the company may require additional cost pass-ons in the upcoming quarter.

The valuation metrics remain attractive, with the current Price to Book Value standing at 4.9x, and the Dividend Yield estimated at 3.6%. Analysts remain confident that the positive balance sheet, supported by an estimated 203,165 in Capital Employed by March 2026, provides a strong foundation for sustained growth.

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