Is Hero MotoCorp overvalued or undervalued?

As of 18 July 2025, the valuation grade for Hero MotoCorp has moved from attractive to very attractive, indicating a significant improvement in its perceived value. The company is currently considered undervalued. Key ratios include a PE ratio of 20.09, an EV to EBIT of 15.90, and a ROE of 22.72%, which suggest strong profitability and efficient capital use.
In comparison to its peers, Hero MotoCorp stands out with a PE ratio significantly lower than Bajaj Auto's 31.84 and Eicher Motors' 32.62, both of which are categorized as expensive. Additionally, the company's EV to EBITDA ratio of 13.70 is more favorable than Bajaj Auto's 22.34, reinforcing its attractive valuation. Notably, Hero MotoCorp has outperformed the Sensex over the past week with a stock return of 4.41% compared to the Sensex's decline of 0.90%, further supporting the notion of its undervaluation.