Buy Hero MotoCorp: Why Nirmal Bang turns incrementally constructive on stock

Nirmal Bang Institutional Equities said it turned incrementally constructive on Hero MotoCorp as demand indicators strengthened across domestic, export and EV segments. The brokerage said an improving product mix, expanding global footprint and scaling EV operations strengthened Hero’s medium-term growth trajectory. 

It maintained a ‘Buy’ rating with a target price of Rs 7,190, valuing the standalone business at 20.5 times estimated September 2027 earnings per share, while assigning Rs 488 per share value to associates including Ather, Hero FinCorp and Euler. The target hints at a potential 16 per cent upside ahead. 

Nirmal Bang expects Hero MotoCorp to report 9 per cent volume CAGR over FY25–27E. It said Hero’s domestic share trends improved, supported by rural demand tailwinds, an accelerating EV rollout and firm export momentum. Lower inventories, stable financing availability and GST-driven affordability improvements provided visibility for sustained demand through H2FY26. The brokerage expects high single-digit volume CAGR over FY25–27E, aided by operating leverage and firmer pricing power.

Nirmal Bang noted that Hero MotoCorp gained market share in October and November, supported by 26 per cent VAHAN growth that outperformed peers. The two-wheeler maker’s Management reiterated its 14–16 per cent Ebitda margin guidance, driven by premiumisation, EV expansion and disciplined cost execution. 

Exports were seen contributing at least about 10 per cent of volumes in H2.

In November, Hero MotoCorp reported 31 per cent year-on-year wholesale growth at around 6 lakh units, supported by firm rural and urban demand and strong traction in newer models such as Xtreme 125R and Xoom 160. 

“VIDA maintained a strong scale-up with 66 per cent year-on-year retail growth and a double-digit EV share. Export volumes rose 70 per cent year-on-year, aided by rising momentum in Latin America and Africa and a re-entry into Europe,” Nirmal Bang said.

Strategic shift in portfolio positioning

According to Nirmal Bang, Hero continued to evolve into a more balanced, multi-segment two-wheeler player, posting market share gains across the 100–125cc motorcycle and scooter segments. Upgrades and launches such as HF Deluxe Pro and Glamour X supported this trend. EV penetration improved to more than 10 per cent on the back of the VIDA VX2 platform, with margins gradually improving due to cost optimisation and operational leverage. Overall market share had begun to stabilise after several years of declines, helped by a refreshed entry and executive lineup and tighter inventory management.

Entry-level motorcycle recovery aided by GST 2.0

The sub-110cc commuter segment showed early signs of recovery in H1FY26, with segment share rising from 7.9 per cent to 9.2 per cent over two quarters. Hero gained 3 per cent market share in Q2 and 5 per cent in H1, supported by upgrades to Splendor and HF Deluxe. With GST 2.0 improving affordability for value-conscious buyers, Nirmal Bang said the momentum should strengthen further. Hero’s dominant position in this price-sensitive category, where it held about 79 per cent market share in FY25, positioned it as a key beneficiary of the policy change.

“Exports accelerated with 70 per cent year-on-year growth in November, taking Hero’s global market share above 8.5 per cent. Higher premium motorcycle shipments, which accounted for 40 per cent of export sales, supported the expansion. Hero now operated in 52 countries, with rising traction in Latin America and Africa and a re-entry into Europe supported by Euro-5+ compliant models,” it said.