Is Hero MotoCorp overvalued or undervalued?

As of 22 August 2025, the valuation grade for Hero MotoCorp has moved from attractive to very attractive, indicating a strong positive shift in its perceived value. The company is currently considered undervalued, supported by a PE ratio of 19.85, an EV to EBITDA ratio of 15.85, and a PEG ratio of 0.85, all of which suggest that the stock is trading at a favorable valuation compared to its earnings growth prospects.
In comparison to its peers, Hero MotoCorp stands out with a significantly lower PE ratio than Bajaj Auto at 31.94 and Eicher Motors at 33.62, both of which are classified as expensive. Additionally, Hero MotoCorp's ROCE of 40.13% and ROE of 22.72% further highlight its efficient capital utilization and profitability relative to competitors. Notably, the company's stock has outperformed the Sensex over the past year, with a return of 20.08% year-to-date compared to the Sensex's 4.05%, reinforcing the argument for its undervaluation.