Motilal Oswal Maintains Buy Call on Hero MotoCorp, Targets Rs 6248

Hero MotoCorp's Strong Performance Continues into 4QFY26

Hero MotoCorp, India's largest two-wheeler manufacturer, has reported a profit after tax (PAT) of INR14 billion for the fourth quarter of fiscal year 2026 (4QFY26), in line with the expectations of Motilal Oswal's research team. Despite the increased investment in its electric vehicle (EV) business, the company's margins remained stable year-over-year.

The research team at Motilal Oswal expects Hero MotoCorp to benefit from a gradual recovery in rural demand, driven by the company's strong brand equity in the economy and executive segments. Additionally, the company's focus on expanding its presence in the scooter market, both for internal combustion engine (ICE) and EVs, as well as its export business, is expected to drive volume growth.

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At current valuations, Hero MotoCorp appears attractively priced, with an estimated price-to-earnings ratio of ~18.3x for fiscal year 2027 estimates and ~16.2x for fiscal year 2028 estimates. Motilal Oswal's research team has reiterated a BUY rating for the stock with a target price of INR6,248, based on an estimated price-to-earnings ratio of 18x for fiscal year 2028 estimates, plus INR89 and INR419 for Hero FinCorp and Ather, respectively, after a 20% holdco discount.

Outlook

Motilal Oswal's research team projects a compound annual growth rate (CAGR) of ~10%/9%/9% in revenue/EBITDA/PAT over fiscal years 2026-2028. Based on current valuations, the stock appears attractively priced, and the research team has reiterated a BUY rating with a target price of INR6,248.