Valuation Metrics Signal Enhanced Price Attractiveness
As of 12 Feb 2026, Hero MotoCorp’s price-to-earnings (P/E) ratio stands at 20.55, a significant discount compared to key peers such as Bajaj Auto (30.81), Eicher Motors (39.47), and TVS Motor Co. (62.86). This lower P/E multiple suggests that Hero MotoCorp is trading at a more reasonable valuation relative to its earnings potential. The price-to-book value (P/BV) ratio of 5.41, while elevated, remains more palatable than the premium multiples seen in some competitors, reflecting a balanced market perception of the company’s asset base and growth prospects.
Further supporting the valuation appeal is the enterprise value to EBITDA (EV/EBITDA) ratio of 15.78, which is markedly lower than Eicher Motors’ 38.08 and Bajaj Auto’s 22.77. This metric underscores Hero MotoCorp’s relatively efficient earnings generation compared to its enterprise value, signalling better value for investors seeking operational profitability.
Strong Fundamentals Underpin Valuation
Hero MotoCorp’s return on capital employed (ROCE) is an impressive 49.38%, while return on equity (ROE) stands at 25.15%. These figures highlight the company’s ability to generate substantial returns on invested capital and shareholder equity, reinforcing the rationale behind its upgraded valuation grade. The dividend yield of 4.84% further enhances the stock’s attractiveness, offering a steady income stream alongside capital appreciation potential.
Despite a day change of -1.20% and a recent price dip to ₹5,681.50 from a previous close of ₹5,750.70, the stock remains well above its 52-week low of ₹3,322.60 and is trading within striking distance of its 52-week high of ₹6,390.00. This price action suggests a consolidation phase rather than a fundamental weakness, providing a potential entry point for value-oriented investors.
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Comparative Performance and Market Context
Over the past year, Hero MotoCorp has delivered a remarkable 39.18% return, significantly outperforming the Sensex’s 10.41% gain. The three-year and ten-year returns are even more striking, with the stock appreciating 119.82% and 127.40% respectively, compared to the Sensex’s 38.81% and 267.00%. While the ten-year return trails the benchmark, the medium-term performance highlights Hero MotoCorp’s resilience and growth trajectory within the automobile sector.
However, short-term price movements have been less favourable, with a one-week decline of 3.00% against a 0.50% gain in the Sensex and a one-month drop of 1.59% versus a 0.79% rise in the benchmark. This divergence may reflect sector rotation or profit-taking, but the underlying fundamentals remain robust.
Peer Comparison Highlights Valuation Edge
When benchmarked against its peers, Hero MotoCorp’s valuation stands out as very attractive. Bajaj Auto and TVS Motor Co. are classified as expensive, with P/E ratios of 30.81 and 62.86 respectively, while Eicher Motors is deemed very expensive at 39.47. The PEG ratio of Hero MotoCorp at 0.62 is substantially lower than Bajaj Auto’s 1.66 and Eicher Motors’ 1.84, indicating that Hero’s earnings growth is undervalued relative to its price.
These valuation differentials suggest that Hero MotoCorp offers a more compelling risk-reward profile for investors seeking exposure to the automobile sector, especially given its strong return metrics and dividend yield.
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Mojo Score and Rating Update
MarketsMOJO has recently revised Hero MotoCorp’s Mojo Grade from Strong Buy to Buy as of 04 Feb 2026, reflecting a recalibration of risk and reward in the current market environment. The Mojo Score stands at a healthy 75.0, signalling solid fundamentals and favourable valuation. The Market Cap Grade remains at 1, indicating the company’s large-cap status and liquidity profile.
While the downgrade from Strong Buy to Buy may temper some enthusiasm, it also underscores a more cautious optimism, acknowledging the stock’s recent price correction and the broader market volatility. Investors should weigh these factors alongside the company’s strong operational metrics and valuation appeal.
Outlook and Investment Considerations
Hero MotoCorp’s transition to a very attractive valuation grade presents an opportune moment for investors to consider adding the stock to their portfolios. The company’s robust return ratios, reasonable valuation multiples relative to peers, and attractive dividend yield combine to create a compelling investment case.
However, investors should remain mindful of sector-specific risks such as regulatory changes, commodity price fluctuations, and competitive pressures from both domestic and international players. The recent short-term price softness may also reflect broader market uncertainties that could persist in the near term.
Overall, Hero MotoCorp’s valuation shift signals a favourable entry point for long-term investors seeking exposure to India’s automobile sector, supported by strong fundamentals and a more reasonable price tag compared to its peers.
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