Target: ₹6,804
CMP: ₹5,755.20
Hero MotoCorp’s (HMCL) 3QFY26 PAT at ₹14.4 billion came in slightly above our estimate of ₹1,360 crore, largely due to higher other income. Margins remained stable yoy despite the ramp-up in its EV business.
We expect HMCL to deliver a volume CAGR of about 7 per cent 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 per cent in revenue/EBITDA/PAT over FY25-28.
Rural sentiment is favorable on the back of healthy monsoon and positive terms of trade for farmers. Further, management has indicated that it is seeing a gradual recovery in rural markets currently. Given that HMCL has a dominant 100-110cc 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 onwards and the upcoming 8th pay commission. Given its refreshed product portfolio, we expect HMCL to outperform the scooter segment, albeit over a low base.
At about 19.7x/17.9x FY27E/28E EPS, the stock appears attractively valued. We reiterate our Buy rating with a TP of ₹6,804 (based on 20x Dec’27E EPS + ₹91/423 for Hero FinCorp/Ather after 20 per cent holdco discount).
Published on February 9, 2026