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 improvement in its perceived value. The company is currently considered undervalued based on its financial metrics. Key ratios include a PE ratio of 19.85, an EV to EBITDA 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 potential.
In comparison with its peers, Hero MotoCorp stands out favorably against Bajaj Auto, which has a PE ratio of 31.94, and Eicher Motors, with a PE ratio of 33.62, both categorized as expensive. This positions Hero MotoCorp as a more attractive investment opportunity within the automobile sector. Additionally, the company's recent stock performance has outpaced the Sensex, with a year-to-date return of 20.08% compared to the Sensex's 4.05%, reinforcing the notion of its undervaluation.