Is Hero MotoCorp overvalued or undervalued?

As of 15 July 2025, Hero MotoCorp's valuation grade has moved from very attractive to attractive, indicating a shift in market perception. The company is currently fairly valued. Key ratios include a PE ratio of 20.36, an EV to EBIT of 16.13, and a ROE of 22.72%. In comparison to peers, Bajaj Auto is considered expensive with a PE of 31.66, while Eicher Motors is categorized as very expensive with a PE of 32.4.
Despite the recent downgrade in valuation grade, Hero MotoCorp has shown resilience with a year-to-date return of 7.07%, outperforming the Sensex's 5.67% during the same period. The company's solid performance metrics, such as a dividend yield of 3.14% and a robust ROCE of 40.13%, further support its fair valuation in the current market landscape.