Hero MotoCorp's Margins Stable Despite Weak Q1 Volumes, Says Motial Oswal Maintaining 'Buy'

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Motilal Oswal Report

We expect Hero MotoCorp Ltd. to deliver a volume CAGR of ~4% over FY25-27, driven by new launches and a ramp-up in exports. Hero MotoCorp will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments.

We project 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 target price of Rs 5,355 (based on 18x Jun’27E EPS + Rs 129/235 for Hero FinCorp/Ather post-20% Holdco discount).

Hero MotoCorp’s Q1 FY26 PAT at Rs 11.2 billion came in above our estimate of Rs 10.5 billion, led largely by higher other income. Hero Motocorp was able to retain its margins despite weak volumes due to price hikes and an improved mix.

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