HEROMOTOCO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're looking for a comprehensive fundamental analysis of Hero MotoCorp, with a numeric rating, valuation insights, and strategic guidance. I see you're focused on long-term investment potential, so I’ll weigh profitability, capital efficiency, valuation, and business durability to give you a well-rounded view.

📊 Fundamental Analysis of Hero MotoCorp

🔍 Core Financials

Profitability

PAT Qtr: ₹1,126 Cr vs ₹1,081 Cr — stable growth (↑0.27%).

EPS: ₹231 — strong earnings base.

ROE: 23.8%, ROCE: 31.5% — excellent capital efficiency.

Leverage & Liquidity

Debt-to-equity: 0.01 — virtually debt-free, highly resilient.

Dividend Yield: 3.07% — attractive for income investors.

Cash Flow

Operating cash flow remains robust; recent reports show ₹4,297 Cr from operations

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Net cash flow slightly negative due to capex and dividend payouts

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📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 23.3 Below industry average (33.4) — undervalued

P/B Ratio ~5.4 Reasonable given high ROE

PEG Ratio 1.00 Fairly valued based on growth

Intrinsic Value ~₹5,800–₹6,000 Close to current price — limited upside

🏍️ Business Model & Competitive Edge

Market Leader: Dominates the two-wheeler segment in India, especially rural and commuter markets.

EV Transition: Strategic push into electric vehicles with Vida brand — long-term growth lever.

Brand & Distribution: Massive dealer network and brand loyalty.

Operational Efficiency: Lean cost structure and high asset turnover.

📈 Technical & Entry Guidance

Current Price: ₹5,370

DMA 50/200: ₹4,910 / ₹4,509 — strong uptrend.

RSI: 69.2 — nearing overbought zone.

MACD: 158 — bullish momentum.

🎯 Entry Zone

Ideal Buy Range: ₹5,000–₹5,200 — wait for minor correction.

Stop Loss: ₹4,850

Target: ₹6,100–₹6,200 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Strong fundamentals, dividend yield, and brand moat.

Buy on dips: Especially if price retraces to ₹5,000 zone.

Growth Triggers: EV expansion, export growth, and premium segment penetration.

⭐ Fundamental Rating

4.5

Let me know if you’d like a peer comparison with Bajaj Auto or TVS next!

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