Geojit has reiterated a BUY recommendation on Hero MotoCorp with a revised target price of Rs. 5,688, implying an upside potential of nearly 14% from the current market price of Rs. 4,970. The brokerage believes Hero MotoCorp is entering a fresh growth phase supported by stronger traction in premium motorcycles, scooters, electric vehicles and international markets. Q4FY26 performance reflected broad-based strength, with revenue, EBITDA and profit all posting robust double-digit growth. The company’s strategic investments into VIDA electric mobility, Harley-Davidson partnerships and premium dealership expansion are expected to strengthen long-term positioning in India’s rapidly evolving mobility landscape.

Geojit Reaffirms BUY Call as Hero MotoCorp Accelerates Growth Strategy

Hero MotoCorp continues to strengthen its dominance in India’s two-wheeler industry. The company remains the country’s largest motorcycle manufacturer by volume and is steadily broadening its business model beyond commuter motorcycles into premium bikes, scooters and electric mobility.

Geojit highlighted that the company’s transformation strategy is gaining traction across multiple segments. The brokerage rolled forward its valuation and maintained a positive outlook based on improving operational efficiency, rising premiumisation and expanding market reach.

The brokerage values the stock using a Sum-of-the-Parts (SOTP) methodology and arrives at a target price of Rs. 5,688 per share. This includes value from Hero’s standalone operations along with strategic investments such as Hero Fincorp and Ather Energy.

Q4FY26 Earnings Showcase Strong Momentum Across Segments

Hero MotoCorp delivered a strong operational performance during Q4FY26. Revenue from operations surged 28.8% year-on-year to Rs. 12,797 crore, driven by healthy volume growth, stronger realisations and new product launches.

Motorcycle volumes climbed 21.3% YoY to 1.53 million units, while scooter volumes jumped 53.6% YoY to 186,257 units. The brokerage noted that scooter and electric scooter demand remained particularly strong, helping Hero gain market share in urban mobility categories.

Domestic volumes increased 24.2% YoY, while international volumes grew 23.6%, reflecting improving traction in overseas markets.

Operationally, EBITDA rose 31.1% YoY to Rs. 1,856 crore, while EBITDA margin expanded 30 basis points to 14.5%. Management attributed the margin improvement to operating leverage, better pricing discipline and LEAP cost-saving initiatives.

Reported profit after tax increased 29.6% YoY to Rs. 1,401 crore. Adjusted EPS for the quarter came in at Rs. 70 compared with Rs. 54 in the corresponding quarter last year.

Electric Vehicles and Premium Bikes Become Strategic Pillars

The brokerage believes Hero MotoCorp’s future growth will increasingly depend on premiumisation and electric mobility.

The company continues to invest aggressively in its VIDA electric vehicle platform while simultaneously strengthening its premium motorcycle presence through the Harley-Davidson collaboration. Management also plans multiple launches during FY27 across scooters, EVs and premium motorcycles following nine launches and several product refreshes in FY26.

Hero is also expanding its premium dealership network and increasing focus on the 125cc-plus category, where profitability and customer stickiness are generally higher. According to management commentary, scooters are expected to outpace motorcycles in industry growth during FY27, providing another structural opportunity for Hero’s evolving portfolio.

The company additionally expects sustained demand support from urbanisation trends, e-commerce delivery growth and the gig economy.

Margins Remain Resilient Despite Commodity Inflation

Hero MotoCorp continues to manage profitability efficiently despite inflationary pressures.

The company’s average selling price during Q4FY26 rose 3.7% YoY to Rs. 74,646, helping offset broad-based commodity cost inflation across aluminium, steel, rubber and plastics.

Management acknowledged sequential gross margin pressure of nearly 100 basis points during the quarter because of rising raw material costs. However, selective price hikes and operational efficiencies partially mitigated the impact.

Importantly, management reiterated its medium-term EBITDA margin guidance of 14% to 16%, signalling confidence in maintaining healthy profitability despite near-term cost headwinds.

Heavy Investments Planned for Capacity Expansion and Technology

Hero MotoCorp is preparing for long-term expansion through aggressive capital allocation.

Management guided for nearly Rs. 15 billion in capex during FY27 to expand production capacity, particularly in scooters and electric vehicles. The company also plans to continue investing heavily in product development, branding initiatives and technology capabilities.

Additionally, Hero committed approximately Rs. 7 billion toward establishing a new global parts centre in South India. This investment is expected to strengthen the company’s accessories and spare parts ecosystem while improving supply-chain efficiency.

Financial Outlook Suggests Sustained Earnings Expansion

Geojit expects Hero MotoCorp to maintain healthy financial growth over the next two years.

The brokerage projects revenue to rise from Rs. 46,830 crore in FY26 to Rs. 51,923 crore in FY27 and further to Rs. 56,376 crore in FY28. EBITDA is expected to increase to Rs. 8,276 crore by FY28.

Adjusted PAT is estimated to reach Rs. 6,530 crore in FY28, while adjusted EPS could rise to Rs. 326.4. The company is also expected to maintain robust return ratios, with ROE projected near 25% and virtually zero debt on its balance sheet.

Valuation Framework and Investor Takeaway

Geojit’s valuation framework reflects confidence in Hero MotoCorp’s diversified mobility strategy.

The brokerage assigned a 16x FY28E P/E multiple to the standalone business, valuing it at Rs. 5,159 per share. Strategic investments in Hero Fincorp and Ather Energy added another Rs. 662 per share before factoring in a holding company discount.

With continued traction in scooters, premium motorcycles and electric vehicles, Hero MotoCorp appears positioned to transition from a traditional commuter-focused manufacturer into a broader mobility ecosystem player.

Investors, however, should continue monitoring commodity inflation, EV competition and execution risks linked to premiumisation strategies. Nevertheless, the brokerage believes Hero’s improving product mix, expanding global presence and disciplined financial profile provide sufficient confidence to maintain its bullish stance on the stock.