Hero MotoCorp Ltd. is Rated Buy

Current Rating Overview

MarketsMOJO currently assigns Hero MotoCorp Ltd. a 'Buy' rating, reflecting a positive outlook on the stock’s potential for investors. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The company’s Mojo Score stands at 78.0, down from 85.0 at the previous rating update, indicating a slight moderation in enthusiasm but still firmly in the 'Buy' category. This score places Hero MotoCorp among the top 1% of companies rated by MarketsMOJO, ranking 12th among midcap stocks and 39th across the entire market universe of over 4,000 stocks.

Here’s how the stock looks TODAY, as of 28 December 2025:

Quality

Hero MotoCorp demonstrates excellent quality fundamentals. The company boasts a strong long-term Return on Equity (ROE) averaging 20.04%, signalling efficient capital utilisation and consistent profitability. Net sales have grown at a robust annual rate of 10.29%, while operating profit has expanded even faster at 17.46% per annum, underscoring operational strength and effective cost management. The company maintains a very conservative capital structure with an average Debt to Equity ratio of zero, indicating minimal reliance on debt financing and a solid balance sheet. Furthermore, Hero MotoCorp has delivered positive results for the last three consecutive quarters, with a Profit After Tax (PAT) of ₹3,014.18 crores over the latest six months, reflecting a strong growth rate of 42.88%. The Return on Capital Employed (ROCE) for the half year is an impressive 32.40%, and quarterly net sales reached a peak of ₹12,218.39 crores, all of which highlight the company’s operational excellence and resilience.

Valuation

The valuation of Hero MotoCorp remains attractive relative to its peers and historical averages. The company’s current Price to Book Value ratio stands at 5.4, which is considered fair given its growth prospects and profitability metrics. With a ROE of 25.2% currently, the stock offers a compelling risk-reward profile. Over the past year, the stock has delivered a total return of 31.55%, closely aligned with a 27.7% increase in profits, resulting in a Price/Earnings to Growth (PEG) ratio of 0.8. This PEG ratio below 1 suggests that the stock is undervalued relative to its earnings growth, making it an appealing option for investors seeking growth at a reasonable price.

Financial Trend

The financial trend for Hero MotoCorp is decidedly positive. The company’s recent performance shows strong momentum, with a six-month PAT growth rate of 42.88% and a year-to-date stock return of 35.40%. Over the last six months, the stock price has appreciated by 31.70%, reflecting investor confidence in the company’s earnings trajectory and market position. The consistent quarterly improvements and strong profitability metrics indicate that Hero MotoCorp is well-positioned to sustain its growth trajectory in the near term.

Technicals

The technical outlook for Hero MotoCorp is mildly bullish. Despite a slight dip in the stock price on the day of -1.10% and a one-month decline of 8.14%, the medium-term trend remains positive with a three-month gain of 5.81% and a six-month rise of 31.70%. The stock’s price action suggests healthy investor interest and a stable upward momentum, supported by strong fundamentals. Institutional holdings are notably high at 55.15%, indicating confidence from sophisticated investors who typically have greater resources and expertise to analyse company fundamentals. This institutional backing often provides a stabilising influence on the stock price and can be a positive signal for retail investors.

Market Position and Peer Comparison

Hero MotoCorp is a midcap company operating in the automobile sector, a space characterised by cyclical demand and competitive pressures. The company’s strong fundamentals and attractive valuation metrics set it apart from many peers. Its ranking within the top 1% of all stocks rated by MarketsMOJO, and particularly its 12th position among midcaps, underscores its relative strength and appeal. Investors looking for exposure to the automobile sector with a focus on quality and growth may find Hero MotoCorp a compelling choice given its consistent performance and sound financial health.

What the 'Buy' Rating Means for Investors

A 'Buy' rating from MarketsMOJO indicates that the stock is expected to outperform the broader market over the medium term, supported by strong fundamentals and favourable valuation. For investors, this suggests that Hero MotoCorp offers a good balance of growth potential and risk management. The company’s excellent quality metrics, attractive valuation, positive financial trends, and supportive technical signals combine to create a compelling investment case. While the rating is not at the highest level of 'Strong Buy', it reflects a prudent and confident endorsement of the stock’s prospects.

Summary

In summary, Hero MotoCorp Ltd. remains a solid investment opportunity within the automobile sector. The rating was updated on 16 December 2025 to 'Buy', and as of 28 December 2025, the company continues to demonstrate strong financial health, attractive valuation, and positive market momentum. Investors seeking exposure to a fundamentally sound midcap stock with growth potential should consider Hero MotoCorp as a viable option in their portfolio.

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