Buy Hero MotoCorp; target of Rs 6500: Motilal Oswal

Motilal Oswal's research report on Hero MotoCorp

Hero MotoCorp’s (HMCL) 2QFY26 PAT at INR13.9b came in slightly below our est. of INR14.4b, largely due to lower other income. Margins expanded on the back of revenue growth and operational efficiencies. We expect HMCL to deliver a volume CAGR of ~6% over FY26-28, driven by new launches and a ramp-up in exports. HMCL will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments. We project a CAGR of ~8%/11%/12% in revenue/EBITDA/PAT over FY25-28. At ~22.5x/19.6x FY26E/27E EPS, the stock appears attractively valued. We reiterate our BUY rating with a TP of INR6,503 (based on 20x Sep’27E EPS INR141/397 for Hero FinCorp/Ather post-20% Holdco discount).

Outlook

We project a CAGR of ~8%/11%/12% in revenue/EBITDA/PAT over FY25-28. At ~22.5x/19.6x FY26E/27E EPS, the stock appears attractively valued. We reiterate our BUY rating with a TP of INR6,500 (based on 20x Sep’27E EPS + INR141/397 for Hero FinCorp/Ather after 20% Holdco discount).