Hero MotoCorp (HMCL)’s 1QFY26 PAT at INR11.2b came in above our est. of INR10.5b, led largely by higher other income. HMCL was able to retain its margins despite weak volumes due to price hikes and an improved mix. We expect HMCL to deliver a volume CAGR of ~4% over FY25-27, 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 expect a CAGR of ~7%/8%/9% in revenue/EBITDA/ PAT over FY25-27. At ~18.8x/17.3x FY26E/27E EPS, the stock appears attractively valued. We reiterate our BUY rating with a TP of INR5,355 (based on 18x Jun’27E EPS + INR129/235 for Hero FinCorp/Ather post-20% Holdco discount).
OutlookWe reiterate our BUY rating with a TP of INR5,355 (based on 18x Jun’27E EPS + INR129/235 for Hero FinCorp/Ather post-20% Holdco discount).
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