Hero MotoCorp Ltd. is Rated Buy

Current Rating Overview

MarketsMOJO currently assigns Hero MotoCorp Ltd. a 'Buy' rating, reflecting a solid investment opportunity within the automobile sector. This rating is supported by 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 on 12 January 2026, indicating a slight moderation from its previous 'Strong Buy' status but still signalling a favourable outlook for investors.

Quality Assessment

As of 24 January 2026, Hero MotoCorp demonstrates excellent quality metrics. The company boasts a robust long-term Return on Equity (ROE) averaging 20.04%, underscoring efficient capital utilisation and consistent profitability. Net sales have grown at an annualised rate of 10.29%, while operating profit has expanded at 17.46% per annum, reflecting strong operational performance. Additionally, the company maintains a low average Debt to Equity ratio of zero, indicating a conservative capital structure and minimal financial risk. These factors collectively contribute to the 'excellent' quality grade assigned by MarketsMOJO.

Valuation Perspective

Currently, Hero MotoCorp's valuation is considered attractive. The stock trades at a Price to Book Value of 5.1, which is reasonable relative to its sector peers and historical averages. The company’s Return on Equity has improved to 25.2% recently, reinforcing the value proposition. Over the past year, the stock has delivered a total return of 31.15%, while profits have increased by 27.7%, resulting in a favourable Price/Earnings to Growth (PEG) ratio of 0.7. This suggests that the stock is reasonably priced given its earnings growth potential, making it appealing for investors seeking growth at a fair valuation.

Financial Trend and Performance

The latest data as of 24 January 2026 highlights a positive financial trend for Hero MotoCorp. The company has reported positive results for the last three consecutive quarters, with Profit After Tax (PAT) for the latest six months reaching ₹3,014.18 crores, marking a growth of 42.88%. Return on Capital Employed (ROCE) for the half-year stands at an impressive 32.40%, while quarterly net sales hit a record high of ₹12,218.39 crores. These figures indicate strong operational momentum and effective capital deployment, supporting the positive financial grade assigned.

Technical Analysis

From a technical standpoint, Hero MotoCorp is mildly bullish. Despite a recent one-day decline of 2.00% and a one-month drop of 6.35%, the stock has shown resilience with a six-month gain of 23.26% and a one-year return of 31.15%. Year-to-date, the stock is down 6.80%, reflecting some short-term volatility. However, the overall technical indicators suggest a constructive trend, aligning with the 'Buy' rating and signalling potential for further appreciation.

Institutional Confidence and Market Position

Institutional investors hold a significant 55.8% stake in Hero MotoCorp, reflecting strong confidence from knowledgeable market participants. This holding has increased by 0.65% over the previous quarter, signalling continued institutional support. The company is ranked among the top 1% of all stocks rated by MarketsMOJO, positioned 11th among mid-cap companies and 31st across the entire market. Such rankings underscore Hero MotoCorp’s prominence and reliability as an investment choice within the mid-cap automobile sector.

What the 'Buy' Rating Means for Investors

Investors should interpret the 'Buy' rating as a recommendation to consider Hero MotoCorp as a favourable addition to their portfolios. The rating reflects a balance of strong fundamentals, attractive valuation, positive financial trends, and supportive technical signals. While the stock is not currently rated as a 'Strong Buy', the 'Buy' status indicates confidence in the company’s ability to deliver sustainable returns over the medium to long term.

Given the company’s excellent quality metrics, including robust profitability and low leverage, alongside an attractive valuation relative to growth prospects, investors can expect a relatively lower risk profile compared to peers. The positive financial momentum, demonstrated by consistent profit growth and record sales, further supports this outlook. Mildly bullish technical indicators suggest that the stock price has room to appreciate, although some short-term volatility may persist.

Summary

In summary, Hero MotoCorp Ltd. remains a compelling investment opportunity within the automobile sector as of 24 January 2026. The 'Buy' rating by MarketsMOJO is underpinned by excellent quality fundamentals, attractive valuation metrics, a positive financial trajectory, and constructive technical signals. Institutional confidence and strong market positioning add further credibility to this recommendation. Investors seeking exposure to a well-managed mid-cap company with solid growth prospects should consider Hero MotoCorp as a viable option.

Market Performance Snapshot

As of 24 January 2026, the stock’s recent performance includes a one-day decline of 2.00%, a one-week drop of 4.82%, and a one-month decrease of 6.35%. However, the six-month return remains robust at +23.26%, and the one-year return is a healthy +31.15%. These figures illustrate some short-term fluctuations but a strong overall upward trend over the longer term.

Investor Considerations

Potential investors should weigh the current valuation and growth prospects against market volatility and sector dynamics. The company’s low debt levels and strong profitability provide a cushion against economic uncertainties. Moreover, the high institutional ownership suggests that the stock is closely monitored by experienced investors, which can be reassuring for retail participants.

Overall, the 'Buy' rating signals that Hero MotoCorp is well-positioned to benefit from ongoing demand in the automobile sector and maintain its growth trajectory, making it a stock worth considering for medium to long-term investment horizons.

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