Is Hero MotoCorp overvalued or undervalued?

As of 22 August 2025, Hero MotoCorp's valuation grade has moved from attractive to very attractive, indicating a strong positive shift in its market position. The company is currently assessed as undervalued. Key ratios supporting this conclusion include a PE ratio of 19.85, an EV to EBITDA of 15.85, and a PEG ratio of 0.85, which suggests that the stock is priced favorably relative to its growth potential.
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, the company's robust ROCE of 40.13% and ROE of 22.72% further reinforce its strong operational efficiency. Notably, Hero MotoCorp has outperformed the Sensex over the past week and month, with returns of 6.20% and 15.13%, respectively, contrasting with the Sensex's modest gains.