Hero MotoCorp Ltd
Hero MotoCorp Ltd
Consumer Discretionary F&OHero 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]
Hero MotoCorp trades at a reasonable PE of 17.2x with a strong ROE of 29% and compounded profit growth of 37% TTM. The near debt-free balance sheet and 3.72% dividend yield provide downside protection, though working capital deterioration and historically weak sales growth warrant monitoring.
Key Fundamentals
Technical Indicators
Key Insights
Strengths
4- Company is almost debt free.
- Stock is providing a good dividend yield of 3.78%.
- Company has been maintaining a healthy dividend payout of 71.5%
- Debtor days have improved from 24.5 to 18.0 days.
Weaknesses
2- The company has delivered a poor sales growth of 8.90% over past five years.
- Working capital days have increased from 11.8 days to 63.4 days
Growth Rate
AI Analysis — Bull vs Bear
anthropic claude-opus-4.6 2d agoHero MotoCorp trades at a reasonable PE of 17.2x with a strong ROE of 29% and compounded profit growth of 37% TTM. The near debt-free balance sheet and 3.72% dividend yield provide downside protection, though working capital deterioration and historically weak sales growth warrant monitoring.
- Compounded profit growth of 37% TTM significantly outpaces sales growth of 16% TTM, indicating strong operating leverage and margin expansion
- ROE of 29% in the last year is best-in-class and shows improving capital efficiency versus 5-year average of 21%
- Company is almost debt-free, providing significant financial flexibility and resilience during economic downturns
- Dividend yield of 3.72% with a healthy payout ratio of 71.5% offers attractive income in a market where 10-year treasury yields around 7%
- PE of 17.2x is reasonable for a market leader given 29% compounded profit CAGR over 3 years, implying a PEG ratio of approximately 0.59
- Debtor days improved from 24.5 to 18.0 days, reflecting better receivables management and stronger channel position
- 3-year stock CAGR of 21% demonstrates sustained re-rating by the market as fundamentals improve
- 57.58% of analysts rate the stock a Buy with 19 out of 33 analysts recommending purchase, reflecting broad institutional confidence
- 5-year compounded sales growth of only 9% and historical 5-year figure of 8.90% indicates structural volume challenges in the domestic two-wheeler market
- Working capital days have deteriorated sharply from 11.8 days to 63.4 days, a 5x increase that ties up significantly more capital in operations
- 10-year stock CAGR of just 5% suggests prolonged periods of underperformance and dead money for long-term holders
- 10-year compounded profit growth of only 7% shows that the recent profit surge may not be sustainable over full business cycles
- Price-to-book ratio of 4.61x is elevated for a company with only 5% 10-year sales CAGR, limiting margin of safety
- 15.15% of analysts recommend Sell, indicating meaningful disagreement on valuation or growth trajectory
- 10-year compounded sales growth of just 5% lags nominal GDP growth, implying market share or category headwinds over longer horizons
This is AI-generated analysis, not financial advice. Do your own due diligence.
AI News Digest
anthropic claude-opus-4.6 1d ago- Market share eroded to 27.94% Jun 2
Hero's domestic market share declined from 48% in CY13 to 27.94% in FY26, with Honda overtaking in monthly production during January-April 2026.
- EV margins still in investment phase May 25
Hero invested ₹220 crore in EV business in Q4 FY26 alone; EVs remain margin-dilutive with management flagging high single-digit input cost inflation and transitionary margin pressures.
- Wholesale outpacing retail sales Jun 1
May 2026 dispatches exceeded VAHAN registrations by 73,111 units (570,068 vs 496,957), indicating channel stocking ahead of monsoon with dealer inventory at 5 weeks nationally.
- Strong Q4 FY26 financials Jun 3
Standalone net profit rose 29.62% to ₹1,401 crore on 28.75% revenue growth to ₹12,797 crore in Q4 FY26 YoY; full-year revenue grew 16% to ₹47,411 crore with net profit up 31% to ₹5,742 crore.
- First flex-fuel 100cc motorcycles launched Jun 3
Hero launched India's first flex-fuel Splendor+ (₹82,710) and HF Deluxe (₹72,792) compatible with E20-E85 fuels, with plans to expand across all 12 motorcycle models within two years starting July 2026.
- Scooter volumes surged 104% in May Jun 1
Scooter sales more than doubled to 66,305 units from 32,537 units YoY in May 2026; scooter segment grew 48% in FY26 with Destini 125 posting 54% YoY growth.
- VIDA EV sales up 166% Jun 1
VIDA recorded 19,052 VAHAN registrations in May 2026, delivering 166% YoY retail growth; FY26 EV sales reached 151,748 units with 190% growth, climbing to No. 4 in EV rankings.
- Exports surged 78% YoY Jun 1
May 2026 exports reached 33,284 units, up 78% from 18,704 units a year ago, driven by 80/20 market focus strategy with three markets now exceeding 10% share.
- ₹1,500 crore capex for FY27 expansion May 25
Hero committed ₹1,500 crore to double scooter capacity from 60,000 to 100,000 units monthly, plus ₹700 crore for a second global parts center in South India, with 12+ new product launches planned.
- May dispatches up 12% YoY Jun 1
Total dispatches reached 570,068 units in May 2026 vs 507,701 units last year, with domestic sales up 9.8% to 536,784 units; cumulative April-May FY27 growth was 39.73%.
- MotoSports ASO partnership extended 5 years Jun 22
Hero MotoSports celebrated its 10th anniversary and extended its Amaury Sport Organization partnership for 5 years, launching India's Next Dakar Hero talent development program.
- Promoter shares free of encumbrance Jun 17
Promoters confirmed no encumbrance on 69.49 million shares representing 34.73% of total equity for FY26.
- Super Splendor XTEC 2.0 launched May 27
Hero launched the Super Splendor XTEC 2.0 at ₹86,500 with 124.7cc engine delivering 72 kmpl mileage, Bluetooth connectivity, and segment-first hazard lights, priced ₹1,544 below the outgoing disc-brake variant.
- Investor meetings scheduled June 1-5 May 26
Hero MotoCorp scheduled meetings with Bank of America, Morgan Stanley, and JP Morgan from June 1-5 in Mumbai, Gurugram, and virtually.
TL;DR: Hero MotoCorp is firing on multiple cylinders with strong Q4 FY26 results (profit up 30%, revenue up 29%), explosive scooter and EV growth, and a strategic flex-fuel launch backed by government policy support. The key risk remains persistent market share erosion to Honda and margin pressure from EV investments and commodity costs. The trend is improving as Hero's multi-segment strategy in scooters (+104%), EVs (+166%), and exports (+78%) is diversifying growth beyond the legacy commuter motorcycle base, with ₹1,500 crore capex ensuring capacity keeps pace with demand in FY27.
Quarterly Results
| Mar 2023 | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 | Sep 2024 | Dec 2024 | Mar 2025 | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 8,434 | 8,851 | 9,533 | 9,788 | 9,617 | 10,211 | 10,483 | 10,260 | 9,970 | 9,728 | 12,218 | 12,487 | 12,978 |
| Expenses | 7,345 | 7,734 | 8,174 | 8,403 | 8,298 | 8,804 | 9,033 | 8,844 | 8,529 | 8,315 | 10,452 | 10,735 | 11,109 |
| Operating Profit | 1,089 | 1,117 | 1,360 | 1,385 | 1,319 | 1,407 | 1,450 | 1,416 | 1,441 | 1,413 | 1,766 | 1,752 | 1,870 |
| OPM % | 13% | 13% | 14% | 14% | 14% | 14% | 14% | 14% | 14% | 15% | 14% | 14% | 14% |
| Other Income | 238 | 66 | 213 | 288 | 177 | 225 | 239 | 306 | 345 | 939 | 240 | 179 | 210 |
| Interest | 19 | 21 | 25 | 23 | 8 | 19 | 18 | 17 | 17 | 21 | 19 | 20 | 19 |
| Depreciation | 180 | 180 | 187 | 194 | 197 | 205 | 206 | 209 | 204 | 206 | 210 | 219 | 220 |
| PBT | 1,128 | 982 | 1,360 | 1,456 | 1,292 | 1,408 | 1,464 | 1,497 | 1,565 | 2,126 | 1,777 | 1,692 | 1,841 |
| Tax % | 28% | 29% | 26% | 25% | 27% | 27% | 27% | 26% | 25% | 20% | 26% | 25% | 20% |
| Net Profit | 811 | 701 | 1,007 | 1,091 | 943 | 1,032 | 1,066 | 1,108 | 1,169 | 1,706 | 1,321 | 1,275 | 1,474 |
| EPS in Rs | 40.29 | 35.53 | 50.35 | 54.7 | 46.77 | 52.31 | 53.19 | 55.38 | 58.06 | 85.26 | 65.42 | 63.35 | 72.97 |
Profit & Loss
| Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
| Expenses | 24,018 | 24,033 | 24,025 | 27,124 | 28,946 | 25,184 | 26,902 | 26,295 | 30,060 | 32,554 | 35,135 | 40,366 |
| Operating Profit | 3,520 | 4,424 | 4,585 | 5,334 | 5,025 | 4,070 | 4,058 | 3,256 | 4,099 | 5,235 | 5,789 | 7,045 |
| OPM % | 13% | 16% | 16% | 16% | 15% | 14% | 13% | 11% | 12% | 14% | 14% | 15% |
| Other Income | 325 | 421 | 830 | 564 | 741 | 1,434 | 553 | 545 | 567 | 689 | 1,040 | 1,324 |
| Interest | 12 | 15 | 27 | 31 | 37 | 47 | 46 | 53 | 105 | 76 | 71 | 78 |
| Depreciation | 540 | 443 | 502 | 575 | 624 | 846 | 715 | 690 | 697 | 757 | 825 | 855 |
| 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 |
| 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 |
| EPS in Rs | 118 | 157 | 179 | 186 | 172 | 182 | 146 | 116 | 141 | 187 | 219 | 287 |
| Div. Payout % | 51% | 46% | 47% | 51% | 50% | 49% | 72% | 82% | 71% | 75% | 75% | 64% |
Balance Sheet
| 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 | 6,894 |
| CWIP | 719 | 653 | 581 | 355 | 573 | 391 | 495 | 517 | 454 | 484 | 487 | 245 |
| 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
| 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 | 135 |
Ratios
| 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 | 63 |
| ROCE % | 50% | 54% | 48% | 45% | 39% | 27% | 24% | 18% | 23% | 29% | 30% | 36% |
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]