- Hero MotoCorp upgraded to Overweight by JPMorgan with a price target of Rs 6,850
- Market share stabilised at 29.2% in FY26 after years of decline, aiding recovery
- New launches and inventory discipline boost demand and reduce discounting risk
Hero MotoCorp Ltd. is now on the path of recovery on the back of demand revival, strengthening EV market share and narrowing of valuations said JPMorgan in a note on Wednesday. The brokerage has also upgraded Hero MotoCorp to Overweight from Neutral and raised its price target to Rs 6,850 from Rs 5,640, signalling renewed confidence in India's largest two-wheeler manufacturer.
Calling it the “Return of the King,” JPMorgan highlights five core drivers behind its upgrade: stabilising market share after several years of declines, a more optimistic product and inventory outlook, demand revival following GST cuts, strengthening EV market share, and the potential narrowing of Hero's valuation discount relative to peers.
Market Share Stabilises After Years of Decline
Hero has been surrendering two-wheeler retail market share for several quarters. However, the trend reversed in the third quarter of fiscal 2026, with financial year 2026 year-to-date share holding flat at 29.2%. JPMorgan attributes the improvement to better retail traction and a healthier industry backdrop.
The brokerage expects industry two-wheeler volumes to grow at an 8% CAGR between FY26E and FY28E, supporting Hero's gradual recovery.
New Launches, Inventory Discipline Strengthen Outlook
Hero's refreshed entry-level and executive motorcycle portfolio, its core strength, positions it to benefit directly from recent GST cuts on budget two-wheelers. These revisions have revived demand in the price-sensitive segment, long considered Hero MotoCorp's stronghold.
Furthermore, the company has addressed a long-standing investor concern: inventory levels. Wholesale volumes are down 3% year-to-date, while retail volumes have grown 15%, indicating meaningful correction and more disciplined channel management. JPMorgan views this as a structural positive that reduces the risk of future discounting or stock build-up.
EV Market Share Begins to Deliver
Hero MotoCorp's EV business, previously seen as a weak spot, is beginning to show traction. Its EV market share has risen from 2% in fiscal 2024 to 9% in so far in this fiscal, aided by improving product-market fit and expanding acceptance across regions.
Notably, Hero is gaining EV share even in states where its ICE performance has weakened. In Andhra Pradesh and West Bengal, where Hero's ICE market share fell to 14% and 17% respectively, its EV share surged to 11% and 24%, highlighting robust early adoption and competitive positioning.
Valuation Discount May Narrow
Historically, Hero MotoCorp has traded at a steep valuation discount to peers TVS Motor and Bajaj Auto, averaging 45% and 14% respectively over 10 years. JPMorgan argues that with stabilising market share and improving EV traction, this gap could reduce.
Under alternative valuation scenarios:
At a narrower 35% discount to TVS, Hero's fair value would be Rs 7,800 (23x P/E).
Valued in line with Bajaj Auto, the fair value rises to Rs 7,400 (22x P/E).
For now, JPMorgan continues to value the core two-wheeler business at 20x Dec-27E P/E, above historical averages, and assigns Rs 451 per share for its stakes in Ather Energy, Hero Fincorp, and Euler Motors on a sum-of-the-parts basis.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.