Hero MotoCorp shares rose 4% to Rs 5,766 apiece on November 17 to emerge as top midcap gainer after margin expansion in September quarter impressed brokerages.
Analysts praise Q2 margin expansion but some voiced caution on sustainability of results.
The two-wheeler maker's EBITDA margin grew 55 basis points YoY to 15% in Q2FY26.
Motilal Oswal said it expects the company to deliver a volume CAGR of 6% over FY26-28, driven by new launches and a ramp-up in exports.
It gave a "Buy" rating with a target price of Rs 6,500, which implies up to 15% upside form current market price.
"Hero MotoCorp’s (HMCL) Q2FY26 PAT at Rs 1,390 crore came in slightly below our estimate of Rs 1,440 crore, largely due to lower other income. Margins expanded on the back of revenue growth and operational efficiencies. It will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments," said Motilal Oswal.
Nirmal Bang said Hero MotoCorp outperformed industry during the festive season, gaining 40 bps market share.
Sustained volume growth, rising premium mix and expanding EV portfolio to strengthen company's leadership in two-wheelers, said Nirmal Bang.
However, Antique Stock Broking said the stock's recent rally has priced in near-term optimism.
The brokerage said it is awaiting clearer evidence of sustained EV profitability before upgrading stock to 'accumulate' from 'hold'.
Meanwhile, Ambit said recent uptick in first-time buyers, market share gains in EV segment and export momentum may not be sustainable
So far in 2025, the stock rose 38%.
Hero has enhanced its premium offerings, which are supported by a strong framework for scaling up its premium business, said Axis Securities, adding that they maintain their "Buy" rating on the stock on reasonable valuations.
"Hero’s ICE EBITDA margin expanded to 17.7% in Q2FY26, an improvement of 121 bps, driven by lower material costs, cost efficiencies, and a favourable product mix. The company continues to invest in brand building, new businesses, and new products, while overall margins improved 54 bps to 15.0% despite EV investments of approximately Rs 252 Cr. The recent PLI certification for VIDA V2 Pro is expected to support EV profitability," the brokerage said.
With inputs from Reuters
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