Hero Motocorp
Hero Motocorp
Automobiles F&OKey Fundamentals
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Key Insights
Strengths
4- Company is almost debt free.
- Stock is providing a good dividend yield of 3.58%.
- Company has been maintaining a healthy dividend payout of 71.5%
- Debtor days have improved from 24.5 to 18.0 days.
Weaknesses
1- The company has delivered a poor sales growth of 8.90% over past five years.
Growth Rate
AI Analysis — Bull vs Bear
Hero MotoCorp has a market capitalisation of about ₹1,06,459 crore and trades at a P/E of 19.3x and a P/B of 4.89x. It pays a 3.49% dividend yield and earned a 28% ROE last year. The company is almost debt free and grew profit at a 28% CAGR over three years, but its long-term growth is modest: sales compounded at 5% and profit at 7% over 10 years, and the stock returned only 1% over the past year.
- Returns on equity have been high and steady: 28% last year, 24% over 3 years, 21% over 5 years and 23% over 10 years. This points to a durable ability to earn well on shareholder capital.
- Profit grew at a 28% CAGR over 3 years while sales grew at 12%. Earnings growing more than twice as fast as revenue suggests operating leverage and better margins in the recent cycle.
- TTM sales grew 26%, well above the 3-year sales CAGR of 12% and the 5-year CAGR of 9%. Revenue momentum has picked up recently.
- The dividend yield is 3.49% and the payout ratio is 71.5%. That is a high cash return for a large-cap company with a market cap of about ₹1,06,459 crore.
- The company is almost debt free. Its balance sheet can absorb demand downturns and fund capex without leverage, and it can keep paying a 71.5% payout without borrowing.
- Debtor days improved from 24.5 to 18.0. The company is collecting from customers faster, which helps working capital and cash conversion.
- The P/E of 19.3x is low next to the 28% 3-year profit CAGR and 28% last-year ROE. On these figures, the valuation does not look stretched against recent earnings growth.
- Sales grew only 8.9% a year over 5 years and 5% a year over 10 years. That is a weak long-term growth record for a market leader.
- Profit compounded at just 7% a year over 10 years. The strong 28% 3-year figure may partly reflect a recovery from a low base rather than a structural step-up.
- TTM profit grew 10% while TTM sales grew 26%. Profit is lagging revenue by a wide margin, which could mean margin pressure from costs, pricing, discounts or product mix.
- Over 10 years the stock returned a 5% CAGR, and over the last year just 1%. Long-term shareholder returns have been muted despite high ROE.
- The stock trades at 4.89x book value. That premium assumes ROE stays near the 24–28% range, and a drop toward the 5-year average of 21% could put pressure on the multiple.
- Paying out 71.5% of profit as dividends leaves less money to reinvest. This may limit spending on new growth areas such as electric vehicles and premium segments, where growth needs capital.
- ROE has moved around across periods: 21% over 5 years versus 28% last year. Returns are sensitive to the cycle, especially rural and entry-level two-wheeler demand.
This is AI-generated analysis, not financial advice. Do your own due diligence.
AI News Digest
- Lagging Bajaj, TVS on growth Sep 5
Hero's total August 2026 sales grew just 2.6% YoY to 5,68,398 units, while Bajaj Auto grew 28% to 5,35,764 and TVS grew 21% to 6,16,540. Q1 FY27 volume growth of 22.7% also trailed Bajaj (29%) and TVS (27.7%).
- August dispatches miss estimates Sep 2
August 2026 dispatches of 568,398 units missed the ~590,000 estimate. The 19% figure cited appears to be VAHAN retail growth, since the dispatch split shows domestic up only 4.46% to 542,305 units.
- Exports slump, Bangladesh risk Sep 2
August exports fell 24.56% YoY to 26,093 units from 34,588, driven by turmoil in Bangladesh, historically ~27% of export dispatches. Hero is largely missing the Africa/LatAm export boom, where Bajaj 2W exports rose 53% to 241,850 units.
- Commodity inflation squeezing margins Sep 2
Gross margin contracted 300 bps in Q1 FY27 on ~4.5% net commodity inflation, and EBITDA margin fell 120 bps to 13.3%, below the 14-16% target. Steel and copper costs are still rising after 1-3% price hikes in early August 2026.
- Structural market share erosion Sep 16
JPMorgan notes Hero has been losing about 120 bps of market share per year because of adverse segment shifts. Any re-rating depends on holding share through the festive season.
- Scooter and EV mix shift Sep 2
YTD (Apr-Aug 2026) scooter volumes rose 70.93% to 332,456 units versus 12.44% motorcycle growth, with total YTD volumes up 17.24% to 2,779,127. Q1 FY27 standalone revenue grew 35.7% YoY to ₹12,999 crore.
- Vida losses narrowing fast Sep 2
Vida's EBITDA loss per vehicle improved from ~₹50,000 to ₹40,000 in Q1 FY27, and August dispatches of 25,558 units are near the 25,000-30,000/month break-even zone. EV capacity is being tripled to 45,000 units/month within FY27.
- JPMorgan Overweight, ₹6,845 target Sep 16
JPMorgan sees ~29% upside from ₹5,301, citing a valuation of 13x FY28E P/E and a business reorganised into four units. 29 of 43 analysts rate the stock 'buy', and Motilal Oswal has a ₹6,000 target.
- Strong retail pull pre-festive Sep 2
VAHAN retail registrations grew 19% YoY in August 2026, well ahead of 4.46% domestic dispatch growth. Domestic ICE retail grew 18% and VIDA retail 38%.
- Dominant 100cc share gains Sep 2
Hero gained 230 bps in the 100cc segment to ~86% share, and Splendor made up over 62% of domestic dispatches in May 2026. Parts and accessories revenue grew 30% YoY.
- Deep valuation discount to peers Sep 5
Hero trades at 18.7x standalone P/E, a 39-61% discount to Bajaj (30.5x) and TVS (48.6x). ROE of 25.5% trails Bajaj's 29.3% and TVS's 34.4%.
- ESG score of 74 Sep 18
Niche Ninety Nine gave Hero an independent ESG score of 74 for FY25-26, based on public data rather than a commissioned assessment.
- Investor conference on Sep 28 Sep 21
Hero will host a virtual investor conference on September 28, 2026, as part of the Bharat Connect Conference series.
- ESIC lien paid, under appeal Sep 8
Hero settled a ₹4.80 crore ESIC lien on its bank accounts for alleged arrears, including interest and costs, and has filed an appeal. The amount is immaterial against a ~₹1,04,574 crore market cap.
- Large trade flag, data suspect Sep 24
A scanner flagged ~3,792,073 shares worth ₹44.61 crore at ~₹117.65/share, which does not match Hero's ~₹5,300 price and is likely a misattribution. The signal is unconfirmed, and counterparties are undisclosed.
TL;DR: Hero MotoCorp is moving its mix toward scooters (+70.93% YTD) and EVs, with Vida nearing break-even, Q1 FY27 revenue up 35.7% and 19% retail growth in August. The stock still lags peers: August dispatch growth was just 2.6% against 21-28% at TVS and Bajaj, exports fell 24.56% on Bangladesh turmoil, and commodity inflation pushed EBITDA margin down to 13.3%. The 39-61% valuation discount and JPMorgan's ₹6,845 target give room for a re-rating, but the overall trend is mixed rather than clearly improving. Festive-season market share, an export recovery and margins returning to the 14-16% band will decide whether the gap with peers closes.
Quarterly Results
| Particulars | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 | Sep 2024 | Dec 2024 | Mar 2025 | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 8,851 | 9,533 | 9,788 | 9,617 | 10,211 | 10,483 | 10,260 | 9,970 | 9,728 | 12,218 | 12,487 | 12,978 | 13,126 |
| Expenses | 7,734 | 8,174 | 8,403 | 8,298 | 8,804 | 9,033 | 8,844 | 8,529 | 8,315 | 10,452 | 10,735 | 11,109 | 11,424 |
| Operating Profit | 1,117 | 1,360 | 1,385 | 1,319 | 1,407 | 1,450 | 1,416 | 1,441 | 1,413 | 1,766 | 1,752 | 1,870 | 1,702 |
| OPM % | 13% | 14% | 14% | 14% | 14% | 14% | 14% | 14% | 15% | 14% | 14% | 14% | 13% |
| Other Income | 66 | 213 | 288 | 177 | 225 | 239 | 306 | 345 | 939 | 240 | 179 | 210 | 460 |
| Interest | 21 | 25 | 23 | 8 | 19 | 18 | 17 | 17 | 21 | 19 | 20 | 19 | 21 |
| Depreciation | 180 | 187 | 194 | 197 | 205 | 206 | 209 | 204 | 206 | 210 | 219 | 220 | 220 |
| PBT | 982 | 1,360 | 1,456 | 1,292 | 1,408 | 1,464 | 1,497 | 1,565 | 2,126 | 1,777 | 1,692 | 1,841 | 1,921 |
| Tax % | 29% | 26% | 25% | 27% | 27% | 27% | 26% | 25% | 20% | 26% | 25% | 20% | 26% |
| Net Profit | 701 | 1,007 | 1,091 | 943 | 1,032 | 1,066 | 1,108 | 1,169 | 1,706 | 1,321 | 1,275 | 1,474 | 1,418 |
| EPS in Rs | 35.53 | 50.35 | 54.7 | 46.77 | 52.31 | 53.19 | 55.38 | 58.06 | 85.26 | 65.42 | 63.35 | 72.97 | 70.59 |
Profit & Loss
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 | TTM |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 27,538 | 28,457 | 28,610 | 32,458 | 33,971 | 29,254 | 30,959 | 29,551 | 34,158 | 37,789 | 40,923 | 47,411 | 50,810 |
| Expenses | 24,018 | 24,033 | 24,025 | 27,124 | 28,946 | 25,184 | 26,902 | 26,295 | 30,060 | 32,554 | 35,135 | 40,352 | 43,720 |
| Operating Profit | 3,520 | 4,424 | 4,585 | 5,334 | 5,025 | 4,070 | 4,058 | 3,256 | 4,099 | 5,235 | 5,789 | 7,059 | 7,090 |
| OPM % | 13% | 16% | 16% | 16% | 15% | 14% | 13% | 11% | 12% | 14% | 14% | 15% | 14% |
| Other Income | 325 | 421 | 830 | 564 | 741 | 1,434 | 553 | 545 | 567 | 689 | 1,040 | 1,310 | 1,089 |
| Interest | 12 | 15 | 27 | 31 | 37 | 47 | 46 | 53 | 105 | 76 | 71 | 78 | 79 |
| Depreciation | 540 | 443 | 502 | 575 | 624 | 846 | 715 | 690 | 697 | 757 | 825 | 855 | 869 |
| PBT | 3,292 | 4,387 | 4,885 | 5,292 | 5,104 | 4,611 | 3,849 | 3,058 | 3,864 | 5,090 | 5,934 | 7,436 | 7,230 |
| Tax % | 29% | 29% | 27% | 30% | 32% | 21% | 24% | 24% | 28% | 26% | 26% | 22% | — |
| Net Profit | 2,364 | 3,112 | 3,546 | 3,722 | 3,466 | 3,659 | 2,936 | 2,329 | 2,800 | 3,742 | 4,376 | 5,776 | 5,488 |
| EPS in Rs | 118 | 157 | 179 | 186 | 172 | 182 | 146 | 116 | 141 | 187 | 219 | 287 | 272 |
| Div. Payout % | 51% | 46% | 47% | 51% | 50% | 49% | 72% | 82% | 71% | 75% | 75% | 64% | — |
Balance Sheet
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity Capital | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 |
| Reserves | 6,500 | 8,794 | 10,276 | 11,932 | 13,080 | 14,366 | 15,376 | 15,807 | 16,616 | 17,659 | 19,232 | 21,571 |
| Borrowings | 100 | 232 | 261 | 228 | 312 | 453 | 584 | 605 | 568 | 606 | 700 | 779 |
| Other Liabilities | 4,014 | 3,829 | 4,736 | 5,197 | 5,072 | 4,815 | 7,096 | 6,027 | 6,694 | 7,847 | 8,418 | 11,063 |
| Total Liabilities | 10,654 | 12,896 | 15,312 | 17,397 | 18,504 | 19,674 | 23,096 | 22,478 | 23,917 | 26,153 | 28,390 | 33,453 |
| Fixed Assets | 2,952 | 3,784 | 4,599 | 4,961 | 4,952 | 6,473 | 6,380 | 6,194 | 6,159 | 6,232 | 6,283 | 6,374 |
| CWIP | 719 | 653 | 581 | 355 | 573 | 391 | 495 | 517 | 454 | 484 | 487 | 765 |
| Investments | 3,118 | 4,501 | 6,066 | 7,669 | 6,114 | 8,359 | 10,582 | 10,528 | 10,891 | 12,751 | 14,384 | 19,286 |
| Other Assets | 3,864 | 3,958 | 4,066 | 4,411 | 6,865 | 4,451 | 5,639 | 5,240 | 6,413 | 6,685 | 7,236 | 7,028 |
| Total Assets | 10,654 | 12,896 | 15,312 | 17,397 | 18,504 | 19,674 | 23,096 | 22,478 | 23,917 | 26,153 | 28,390 | 33,453 |
Cash Flow
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating | 2,186 | 3,722 | 4,007 | 4,017 | 1,032 | 5,518 | 4,110 | 2,104 | 2,614 | 4,923 | 4,297 | 8,315 |
| Investing | 31 | -2,300 | -1,972 | -1,858 | 1,298 | -2,819 | -2,289 | -222 | -421 | -1,828 | -1,703 | -4,478 |
| Financing | -2,131 | -1,475 | -2,036 | -2,102 | -2,252 | -2,602 | -1,852 | -1,975 | -2,147 | -2,717 | -2,815 | -3,534 |
| Net Cash Flow | 86 | -53 | -1 | 57 | 78 | 97 | -31 | -94 | 45 | 379 | -221 | 303 |
| Free Cash Flow | 955 | 2,094 | 2,771 | 3,196 | 57 | 4,230 | 3,537 | 1,545 | 2,052 | 4,146 | 3,463 | 7,227 |
| CFO/OP | 90 | 109 | 113 | 104 | 62 | 149 | 125 | 89 | 85 | 119 | 101 | 134 |
Ratios
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debtor Days | 18 | 16 | 20 | 16 | 29 | 19 | 27 | 27 | 29 | 25 | 30 | 18 |
| Inventory Days | 16 | 14 | 14 | 16 | 19 | 24 | 30 | 26 | 27 | 25 | 27 | 31 |
| Days Payable | 50 | 51 | 62 | 56 | 54 | 58 | 88 | 76 | 73 | 80 | 77 | 88 |
| Cash Conversion Cycle | -16 | -20 | -29 | -24 | -5 | -15 | -32 | -23 | -17 | -30 | -20 | -40 |
| Working Capital Days | -15 | -12 | -17 | -15 | 6 | -10 | -21 | -14 | -7 | -17 | -11 | -31 |
| ROCE % | 50% | 54% | 48% | 45% | 39% | 27% | 24% | 18% | 23% | 29% | 30% | 35% |
Insights
BetaAI-extracted from concalls & annual reports · figures as reported, with sources
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63 extracted metrics + investor summaries across FY02–FY27.
Documents
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Company Information
Hero Moto Corp earlier also known as “Hero Honda” is one of India’s first motorcycle manufacturers. The company started in 1984 as a Technological collaboration with Honda, Japan. Before this collaboration, Hero was selling Cycles under the brand name, Hero Cycles. In 2011, Honda group sold its 26% stake in the company to the Munjals (promoters) and ended the JV. Post the termination of JV, the name of the company was changed to Hero Motocorp. [1] [2]
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