Hero MotoCorp accelerates on EV surge, rural push, says Nirmal Bang; 'Buy'

The brokerage turn incrementally constructive on Hero given improving domestic share trends, rural demand tailwinds, strengthening EV ramp-up, and strong export momentum

Domestic brokerage firm Nirmal Bang remains bullish on two-wheeler manufacturer Hero MotoCorp and has maintained its Buy rating on the stock, citing an improving product mix, global expansion, and EV scale-up as key drivers of the company’s medium-term growth trajectory.

 

Yash Agrawal, research analyst at Nirmal Bang, has retained the Buy call with a target price of ₹7,190 (Sep’27E), valuing the standalone business at 20.5x Sep’27E EPS and assigning ₹488 per share to its associates—Ather, Hero FinCorp, and Euler—after applying appropriate holding discounts. The implied valuation of about 21x, he said, aligns with long-term averages, while a volume compound annual growth rate (CAGR) of about 9 per cent is expected over FY25 to FY27.

 

“We turn incrementally constructive on Hero given improving domestic share trends, rural demand tailwinds, strengthening EV ramp-up, and strong export momentum. Lower inventories, stable financing, and GST-led affordability aid visibility into sustained demand through H2FY26. We expect high single-digit volume CAGR over FY25 to FY27, supported by operating leverage,” Agrawal wrote in the report.

Hero’s FY26 outlook

The brokerage noted that Hero gained market share during October and November with 26 per cent VAHAN growth, outperforming peers. Management reiterated its Ebitda margin guidance of 14 to 16 per cent, supported by premiumisation, EV expansion, and cost execution.

 

“Exports are expected to contribute at least about 10 per cent of volumes in H2. Strong Nov-25 momentum: Hero posted 31 per cent year-on-year wholesale growth in Nov-25 to 0.6 million units, supported by healthy rural and urban demand, led by strong traction in new models like the Xtreme 125R and Xoom 160. VIDA maintained strong scale-up with 66 per cent year-on-year retail growth and a double-digit EV share, while exports surged 70 per cent year-on-year with expansion into Europe and robust LATAM and Africa momentum,” Nirmal Bang said in its report.  CATCH STOCK MARKET LIVE UPDATES TODAY

Strengthening across segments

According to the brokerage, Hero is evolving into a more balanced, multi-segment two-wheeler player, gaining market share across the 100–125cc motorcycle and scooter categories, supported by upgrades and launches such as the HF Deluxe Pro and Glamour X. EV penetration now exceeds 10 per cent nationally, led by scale-up of the VIDA VX2 platform, while EV margins are gradually improving through cost optimisation and operational leverage.

 

“Overall market share has begun to stabilise after several years of declines, aided by a refreshed entry and executive lineup and tighter inventory discipline. Entry-level motorcycle recovery supported by GST 2.0: The sub-110cc commuter category has shown early signs of recovery in H1FY26, as the segment share improved from 7.9 per cent to 9.2 per cent over the past two quarters. Hero has gained 3 per cent market share in Q2 and 5 per cent in H1, supported by upgrades to the Splendor and HF Deluxe,” the brokerage observed.

 

Nirmal Bang expects the momentum to strengthen further with GST 2.0 improving affordability in value-conscious segments, noting that Hero’s dominant position in this category—with about 79 per cent market share in FY25—positions it as a key beneficiary of these reforms.

Export footprint widens

Nirmal Bang further pointed out that exports accelerated sharply, rising 70 per cent year-on-year in November and pushing Hero’s global market share above 8.5 per cent. Growth has been supported by an increasing share of premium motorcycle shipments, which now account for 40 per cent of total sales. The company is present in 52 countries, with strengthening traction in markets across Latin America and Africa, and a re-entry into Europe aided by Euro-5+ compliant models.   

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)