Hero MotoCorp Shares Hit One-Month Low After Jefferies Downgrade

The shares of Hero MotoCorp Ltd. fell over 5% on Thursday hitting one-month low after Jefferies downgrades it to Underperform from Hold and cut its target price to Rs 4,950 from Rs 5,550, implying a downside of around 15%.

While the brokerage remains positive on the medium-term outlook for two-wheeler demand, it believes near-term triggers have weakened and valuations now look stretched after a sharp rally in the stock.

Jefferies acknowledges that the two-wheeler industry is still in a recovery phase after one of its worst downturns in decades. Even in financial year 2025, industry wholesales remained around 6% below pre-pandemic financial year 2019 levels. However, it flags that the recent demand boost driven by the Goods and Services Tax cut appears to have faded faster than expected.

The two-wheeler industry saw a slow start to financial year 2026, with registrations growing just 2% year-on-year between April and July. The GST cut announced in September provided a sharp but short-lived boost, with volumes rising 26% over August to October.

Since then, registrations have turned flat again on a year-on-year basis in November and December month-to-date, although registrations for April to November are still up 10% year-on-year. According to Jefferies, this trend suggests that the GST-driven demand uptick is losing momentum.

Market share concerns have also resurfaced for Hero MotoCorp. The company’s domestic two-wheeler wholesale market share has declined from 36%–37% during financial years 2017 to 2021 to around 28% in April to November 2025, marking a 25-year low.

Jefferies also views the recent rally in the stock as largely valuation-driven and therefore unsustainable. Hero MotoCorp shares are up around 40% calendar year-to-date, with Jefferies showing that nearly two-thirds of this performance has come from expansion in the one-year forward price-to-earnings multiple.

The scrip fell as much as 5.19% to Rs 5,513 apiece on Thursday, the lowest level since Nov. 14. It pared losses to trade 1.81% lower at Rs 5,709 apiece, as of 10:52 a.m. This compares to a 0.09% advance in the NSE Nifty 50 Index.

It has risen 30.23% in the last 12 months and fallen 37.37% year-to-date. Total traded volume so far in the day stood at 0.75 times its 30-day average. The relative strength index was at 46.63.

Out of 43 analysts tracking the company, 26 maintain a 'buy' rating, 10 recommend a 'hold,' and six suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target of Rs 6,079.44 implies an upside of 6.6%.