Hero MotoCorp 2W demand to stay strong; rural, exports boost: Motilal Oswal

Hero MotoCorp Ltd (HMCL) is set to benefit from a sustained pick-up in domestic two-wheeler demand, driven largely by positive rural sentiment and strong product acceptance, according to Motilal Oswal’s recent interaction with the company’s management.

 

The company expects the momentum to continue in the second half of the fiscal year (H2FY26), with overall industry volume growth projected at 8-10 per cent. Demand across segments has been broad-based, with the entry-level motorcycles showing particularly strong performance. HMCL aims to regain lost market share in the 125cc segment, bolstered by the successful launch of the upgraded Glamour and the Xtreme125R with dual-channel ABS, which have received encouraging feedback from customers.

 

Scooters, a key growth area for the company, have also seen major traction, analysts noted. The Destiny125 has helped HMCL outperform peers in recent months, resulting in an 80-basis-point year-to-date (Y-T-D) increase in scooter market share to 5.9 per cent. The company’s electric scooter, Vida VX2, has gained a 12 per cent share in the EV scooter segment, with management targeting 14-15 per cent by March 2026, signaling its ambition for a long-term leadership position in the EV space.  ALSO READ | IT stocks fall as US judge upholds $100k H-1B fee; check details 

According to Motilal Oswal analysts, exports are another key driver for Hero MotoCorp. The company’s strategy of focusing on its top ten international markets, which account for around 80 per cent of volumes, has successfully revived export momentum. Tailored local launches, strengthened dealer networks, and enhanced service capabilities are contributing to growth, with exports currently making up roughly 8 per cent of total volumes and a target of 10 per cent by March 2026.

 

The brokerage expects Hero MotoCorp to achieve a volume compound annual growth rate (CAGR) of approximately 6 per cent between FY25 and FY28. Revenue, Ebitda, and PAT are projected to grow at CAGRs of roughly 10 per cent, 12 per cent, and 13 per cent, respectively, over FY26-28. These estimates are underpinned by strong rural demand, recovery in the 125cc segment, and the ramp-up in exports.  ALSO READ | Cholamandalam Inv refutes Cobrapost claims; Analysts retain 'Buy' call 

Given these positive outlooks, Motilal Oswal has reiterated its ‘Buy’ rating for Hero MotoCorp stock with a target price of ₹6,782. This valuation is based on a multiple of 20x estimated September 2027 earnings per share, plus the assigned values of ₹141 for Hero FinCorp and ₹423 for Ather Energy after applying a 20 per cent holding company (Holdco) discount.

 

Moreover, the management remains confident that with steady demand, successful product launches, and an expanding export footprint, Hero MotoCorp is rightly placed to sustain growth in both conventional motorcycles and scooters, as well as in the electric vehicle segment.

 

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