Hero MotoCorp Limited

Consumer Cyclical — Auto Manufacturers · NSE

₹5,225.00+₹15.00 (+0.29%)

DalalBaazaar Score

76 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by high debt relative to equity, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Hero MotoCorp Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Hero MotoCorp Limited primarily engages in the manufacture and sale of motorised two wheelers, spare parts and related services in India, Germany, Asia, Central and Latin America, Africa, and the Middle East.

IndustryAuto Manufacturers

SectorConsumer Cyclical

Employees9,177

Annual revenue₹47,048 Cr

How does it make money?

Turns over ₹47,048 Cr a year. Of every ₹100 of sales, about ₹12 reaches shareholders as profit, with ₹17 left at the operating level before interest, tax and depreciation. Each of its 9,177 employees supports ₹5.13 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin16.7%

Net margin12.2%

Revenue / employee₹5.13 Cr

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TATA MOTORS LIMITED, TATA MOTORS PASS VEH LTD, MAHINDRA & MAHINDRA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%

TATA MOTORS LIMITEDP/E 37.1x · ROE 32.8%

TATA MOTORS PASS VEH LTDP/E — · ROE -3.0%

MAHINDRA & MAHINDRA LTDP/E 17.8x · ROE 19.7%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 31.9%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 26.6% against a peer median of 19.7% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE31.9%

ROE26.6%

Peer median ROE19.7%

What is the outlook?

30 analysts covering the stock expect revenue to grow about 8.0% and earnings to grow about 12.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+8.0%

Est. earnings growth+12.0%

Analysts30

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +39% while net margin moved +47% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+39%

Margin effect+47%

DalalBaazaar Score

76/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.49 — historically steadier than the index
✓ Large-cap: deep liquidity and broad analyst coverage
✗ High leverage magnifies any downturn in earnings

Quality vs. Valuation

Company Quality

78/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

77/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

19.3x

3Y Median

24.6x

40 monthly readings · mean 25.5x · range 18.2x–39.7x

Sector Median

25.2x

median of 3 sector peers

🟢Current valuation is approximately 22% below its 3y median of 24.6x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 24% below the peer median of 25.2x.

vs. its own history

Cheap

24.6x median over 40 months · -22%

vs. sector peers

Cheap

25.2x median of 3 peers · -24%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

19.3x

P/B

4.84x

EV/EBITDA

13.4x

PEG

0.72

Dividend Yield

3.54%

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 12.9% to 16.7% over 3 years.
Cash generation is improving
Free cash flow is up 259% over 3 years.
Return on equity is rising
ROE has improved from 16.9% to 26.6%.
Return on capital is rising
ROCE has improved from 22.2% to 31.9%.
High return on capital employed
ROCE of 31.9% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 19.3x the stock trades 22% below its own median of 24.6x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Debt is rising
Total debt is up 37% over 3 years — worth checking what it funded.

Red Flags

2 items require attention · 1 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 3.57x — earnings must service borrowings before shareholders see anything.
🟡Debt is increasingFinancial
Total debt is up 37% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 31.9% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 12.9% to 16.7%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 22% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 24% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 3.57x. Interest is payable whether or not the business has a good year.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 11.7% CAGR
Latest reported year was 34.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 15%✓ 16.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹7,215 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 29%✓ 31.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 2 neutral · 2 weak

Market Cap

₹1.05 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

19.3x

Fair

Fairly valued against the generic band

P/B Ratio

4.84x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹271.3

Profitable

Profitable on a per-share basis

ROE

26.6%

Strong

Strong capital efficiency

ROCE

31.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

3.57x

High

High leverage

Revenue Growth (YoY)

34.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-17.2%

Falling

Profits are shrinking

Dividend Yield

3.54%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹7,215 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹5,225

P/E (Forward)

16.2x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

11.6%

Average

Average margins

Net Margin

10.7%

Good

Strong bottom-line conversion

Current Ratio

1.91

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.49

Defensive

Steadier than the market

52W Range Position

32%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

5172.2 / 5393.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

43.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹33,738 Cr	₹37,599 Cr	₹40,712 Cr	₹47,048 Cr	+11.7%
EBITDA	₹4,365 Cr	₹5,559 Cr	₹6,257 Cr	₹7,839 Cr	+21.6%
EBITDA Margin	12.9%	14.8%	15.4%	16.7%	—
PAT (Net Profit)	₹2,810 Cr	₹3,745 Cr	₹4,378 Cr	₹5,742 Cr	+26.9%
EPS	₹140.49	₹187.04	₹218.69	₹286.72	+26.8%
ROE	16.9%	21.2%	22.7%	26.6%	—
ROCE	22.2%	27.0%	28.7%	31.9%	—
Total Debt	₹568 Cr	₹606 Cr	₹700 Cr	₹779 Cr	+11.1%
Free Cash Flow	₹2,010 Cr	₹4,135 Cr	₹3,441 Cr	₹7,215 Cr	+53.1%

🟢 Revenue has grown at 11.7% a year over 3 years.

🟢 EBITDA has grown at 21.6% a year over 3 years.

🟢 EBITDA Margin has risen from 12.9% to 16.7% over 3 years (+3.7 pts).

🟢 PAT (Net Profit) has grown at 26.9% a year over 3 years.

🟢 EPS has grown at 26.8% a year over 3 years.

🟢 ROE has risen from 16.9% to 26.6% over 3 years (+9.7 pts).

🟢 ROCE has risen from 22.2% to 31.9% over 3 years (+9.7 pts).

🔴 Total Debt has grown at 11.1% a year over 3 years.

🟢 Free Cash Flow has grown at 53.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹33,453 Cr

Total Liabilities

₹11,642 Cr

Total Debt

₹779 Cr

Cash & Equivalents

₹687 Cr

Operating Cash Flow

₹8,315 Cr

Capex

-₹1,100 Cr

Shareholding (proxy)

Institutional Holding

36.8%

Insider Holding

37.2%

Corporate Actions

Next Earnings

12 Nov 2026

Dividend Rate

₹185

Ex-Dividend Date

24 Jul 2026

Analyst Consensus

Recommendations

25 Buy · 9 Hold · 4 Sell

Target Price (Mean)

₹6,197.5

+18.6% vs CMP

Target Range

₹4,350 – ₹7,760

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TATA MOTORS LIMITED	37.1x	32.8%
TATA MOTORS PASS VEH LTD	—	-3.0%
MAHINDRA & MAHINDRA LTD	17.8x	19.7%

Recent News

4 mixed2 general

Hero Motors shares up 20% — what's driving the stock? Explained with target, stop-loss

Livemint, 25 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Hero MotoCorp rallies 4%, hits 8-month high; what's driving 2W stock price?

Business Standard, 10 Aug

Why is Hero MotoCorp stock rising today?

Investing.com, 07 Aug

Eicher Motors, Hero Motocorp shares fall up to 5% after August Sales data; should you buy, sell or hold?

Moneycontrol.com, 02 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Hero MotoCorp shares gain over 5% in two sessions post-Q1 show; brokerages see strong demand momentum

ET Auto, 10 AugPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Hero MotoCorp shares gain 3% post Q1; Motilal bullish, Nomura cautious on growth

Moneycontrol.com, 10 AugPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong15.4/20

🟢Financial HealthStrong13.9/20

🟢GrowthStrong16.1/20

🟢ProfitabilityStrong12.9/15

🟢ValuationAttractive11/15

🟢RiskLow6.5/10

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 9% a year11.7% CAGR
✓EBITDA margin holds above 15%16.7%
✓Free cash flow remains positive₹7,215 Cr
✓Debt / EBITDA stays below 2x0.1x
✓ROCE stays above 29%31.9%