Hero MotoCorp Share Price Target at Rs 6,025: Axis Securities
Axis Securities has maintained its BUY rating on Hero MotoCorp Ltd with a revised target price of Rs 6,025, down from Rs 6,500, implying about 18% upside from the Oct. 29 closing price of Rs 5,105. Second-quarter FY27 revenue rose 21.1% year on year to Rs 14,687 crore, beating the brokerage's estimate by 2%, while EBITDA of Rs 1,968 crore was in line and net profit of Rs 1,456 crore missed by 4% on weaker other income. Axis trimmed FY27 and FY28 earnings estimates by up to 7.3%, but argues that market-share gains, a fast-scaling Vida electric business and a pipeline of premium motorcycles still make the stock worth buying.
BUY · MAINTAINEDTarget cut Rs 6,500 to Rs 6,025Q2FY27 Result Update
Axis Securities · Two-wheelers
Hero MotoCorp Shifts Into a Higher Gear on Share Gains, Even as Profit Stalls
Revenue beat, margins held and the Vida electric arm moved closer to break-even. A 4% profit miss and a lower valuation multiple, however, pull the brokerage's target down by Rs 475.
The Quarter at a Glance: Three Warning Lamps, Three Colours
Axis Securities scored the September quarter as a revenue beat, an EBITDA result in line and a profit miss. Read like the tell-tale lamps on a motorcycle console, the picture is mostly green with one light that deserves attention.
Revenue · Beat
Rs 14,687 crore
+21.1% YoY; 2% above Axis estimate
EBITDA · In line
Rs 1,968 crore
Margin 13.4%; estimate 13.5%
Net profit · Miss
Rs 1,456 crore
4% below estimate; flat QoQ
Workshop job card: Q2FY27 standalone (Rs crore)
| Item | Q2FY27 | Q1FY27 | Q2FY26 | YoY | vs Axis est. |
|---|---|---|---|---|---|
| Revenue | 14,687 | 12,999 | 12,126 | +21.1% | +2.4% |
| Average selling price (Rs/vehicle) | 78,620 | 77,498 | 71,723 | +9.6% | +2.4% |
| EBITDA | 1,968 | 1,727 | 1,823 | +7.9% | +1.4% |
| EBITDA margin | 13.4% | 13.3% | 15.0% | -164 bps | -14 bps |
| Other income | 194 | 441 | 233 | -16.8% | -36.7% |
| Net profit | 1,456 | 1,454 | 1,393 | +4.6% | -4.1% |
| EPS (Rs) | 72.8 | 72.7 | 69.6 | +4.5% | -4.1% |
The miss sits below the operating line. Other income fell to Rs 194 crore, far short of the Rs 306 crore Axis had pencilled in and less than half the June quarter's Rs 441 crore. Dividing revenue by the reported average selling price implies roughly 18.7 lakh vehicles sold in the quarter, a TopNews calculation.
Riding Ahead of the Pack
The domestic two-wheeler market grew retail volumes 27% in the quarter, and Hero outpaced it where it matters. Its internal-combustion retail volumes rose 24% against 23% for the ICE industry, and its retail market share improved every month of the quarter.
Slipstream check: Hero vs industry retail growth, Q2FY27
ICE motorcycles and scooters
24%
23%
Electric two-wheelers (Hero = Vida)
105%
82%
Bars drawn to one scale from figures printed by Axis Securities. Vida growth is cited for retail volumes; Axis gives it alongside the H1FY27 share gain.
- Scooters: Hero's ICE scooter market share crossed 10%, a gain of about 160 bps in the first half of FY27.
- Vida: Electric market share improved by 170 bps in H1FY27.
- Splendor: The commuter workhorse grew volumes more than 20%, with the XTEC variant now over 25% of its sales.
- Parts: The parts and accessories business grew revenue 27-28% for a second straight quarter, backed by a Rs 700 crore-plus Global Parts Center 2.0.
Vida Plugs In: Capacity Doubles, Losses Narrow
The electric unit is the quarter's clearest turning point. EV revenue reached about Rs 1,000 crore, nearly 7% of company revenue by TopNews's arithmetic, and gross margins turned positive earlier than expected. Dealer inventory stood at just one day, which explains the urgency behind the capacity plan.
Dealer-yard parking bays: EV capacity, units a month (each bay = 5,000)
Solid bays are installed capacity; dashed bays are management targets.
EBITDA loss, Q1
EBITDA loss, Q2
The EV loss shrank by Rs 64 crore in a single quarter. Production-linked incentive receipts rose to Rs 63 crore and covered about 70% of the portfolio; certification for nearly the whole range came through in October, which should lift unit economics further as volumes scale. Circle areas are drawn to scale.
Premium Launches and the Export Rebound
Hero plans three to four premium motorcycle launches in the second half of FY27 and is widening its premium dealership network beyond 150 stores. ICE scooter capacity has nearly doubled to 80,000 units a month, with more lined up for the Xoom 160.
Xtreme
H2FY27 launch portfolio
Xpulse
H2FY27 launch portfolio
Karizma
H2FY27 launch portfolio
Harley-Davidson
H2FY27 launch portfolio
Exports were the soft patch. Disruptions in Colombia and Bangladesh, which together account for a large share of overseas shipments, weighed on the quarter. Conditions improved toward the end of September, and management expects export wholesale growth to return to double digits in the third and fourth quarters, helped by normalising logistics and new markets in Brazil, Mexico and Africa. For the domestic industry, it guides to mid-to-high single-digit growth in the second half.
Margins: Half the Cost Inflation Passed On
Material costs rose about 1% sequentially in the quarter and roughly 5.5% cumulatively over the first half, of which about half was recovered through price increases. Even so, EBITDA margin edged up 10 bps quarter on quarter to 13.4%, helped by mix, the LEAP cost programme, operating leverage and tight discretionary spending.
H1FY27 material-cost inflation of about 5.5%: who absorbed it
Split as described by management; Axis does not give exact proportions.
Management expects third-quarter margins to stay broadly stable, supported by a price increase of about Rs 1,000 a unit taken in October, and reiterated its medium-term EBITDA margin band of 14% to 16%.
Estimates Trimmed, Growth Intact
Axis raised revenue forecasts but lowered profit, reflecting the margin dilution from EVs and commodity costs. It still models an 11% EBITDA CAGR over FY26-28E.
| Rs crore | FY25 | FY26 | FY27E | FY28E |
|---|---|---|---|---|
| Revenue | 40,756 | 46,830 | 53,540 | 58,740 |
| EBITDA | 5,872 | 6,871 | 7,311 | 8,426 |
| EBITDA margin | 14.4% | 14.7% | 13.7% | 14.3% |
| Adjusted net profit | 4,612 | 5,359 | 5,663 | 6,433 |
| EPS (Rs) | 230 | 268.2 | 283.5 | 322.0 |
| P/E (x) | 16.2 | 19.0 | 18.0 | 15.9 |
| RoE | 22.8% | 23.9% | 22.5% | 22.5% |
| PAT revision vs earlier | - | - | -7.3% | -5.4% |
Volume forecasts were nudged up 0.8% to about 69.2 lakh units in FY27E and 73.9 lakh units in FY28E. The balance sheet stays debt-free, with Axis projecting cash and bank balances to climb to Rs 8,656 crore by FY28E.
How Axis Gets to Rs 6,025: The On-Road Price Break-Up
The cut in the target owes as much to a lower multiple as to lower earnings: Axis now pays 15x core FY28E earnings instead of 16x. At Rs 5,105, the stock trades at 15.9x FY28E EPS of Rs 322 and 11.1x EV/EBITDA, which the brokerage calls reasonable for a business compounding at more than 20% return on equity.
Target for investors: Axis sees the stock reaching Rs 6,025, about 18% above the Oct. 29 price. The stock sits roughly 20% below its 52-week high of Rs 6,390, so investors with a 12-month view could accumulate in tranches, with the Rs 4,672 low as a reference floor.
Target trail in 2026: Rs 6,400 (Feb.) → Rs 5,960 (May) → Rs 6,500 (Aug.) → Rs 6,025 (Oct.). Every call since February 2025 has been BUY.
What's in the Rear-View Mirror
Printed by Axis
Launch execution: premium motorcycle launches face intensifying competition.
Printed by Axis
Margin pressure: slower EV profitability gains or sustained commodity inflation could hit earnings.
Added by TopNews
Export concentration and other income: two markets drive much of exports, and swings in treasury income already caused this quarter's miss.
Objects in mirror may be closer than they appear.
Editor's Note
The report contains a few inconsistencies, shown here rather than resolved silently. Parts growth is given as 27% on the first page and 28% (to Rs 3,630 crore) in the call highlights, without the period for that revenue figure; we show 27-28%. Hero Fincorp is valued at 1.5x FY25 P/B on the first page and 1.5x FY26 P/B in the valuation section. The estimate-revision table labels its last column FY26E where FY28E is meant, and prints volumes of 6.92 and 7.39 under a thousand-units heading, which only makes sense as a much larger unit; we use 69.2 lakh and 73.9 lakh units. FY26 other income is Rs 922 crore in the profit and loss statement but Rs 1,041 crore in the cash-flow statement.
Axis printed two risks; the third risk card is a TopNews addition drawn from the report's own commentary. The implied volume and EV revenue share are TopNews calculations.
Sources
Axis Securities, Hero MotoCorp Ltd Q2FY27 Result Update, Oct. 30, 2026 (analyst Sanchit Karekar); company Q2FY27 results and earnings call as cited in the report; ACE Equity data as cited by Axis. Bars, bays and circles are drawn from figures printed by Axis Securities.
Disclaimer: Investments in securities markets are subject to market risks. This TopNews Stock Report summarises a third-party research report for information only and is not investment advice. Read all related documents carefully and consult a registered adviser before investing.
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