HEROMOTOCO - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.2
| Stock Code | HEROMOTOCO | Market Cap | 1,10,076 Cr. | Current Price | 5,502 ₹ | High / Low | 6,390 ₹ |
| Stock P/E | 22.9 | Book Value | 1,051 ₹ | Dividend Yield | 3.00 % | ROCE | 31.5 % |
| ROE | 23.8 % | Face Value | 2.00 ₹ | DMA 50 | 5,694 ₹ | DMA 200 | 5,232 ₹ |
| Chg in FII Hold | 0.67 % | Chg in DII Hold | -0.04 % | PAT Qtr | 1,393 Cr. | PAT Prev Qtr | 1,126 Cr. |
| RSI | 40.8 | MACD | -92.9 | Volume | 4,44,723 | Avg Vol 1Wk | 4,47,089 |
| Low price | 3,323 ₹ | High price | 6,390 ₹ | PEG Ratio | 0.99 | Debt to equity | 0.01 |
| 52w Index | 71.1 % | Qtr Profit Var | 15.7 % | EPS | 240 ₹ | Industry PE | 27.2 |
💹 Core Financials: Hero MotoCorp demonstrates strong fundamentals with ROE at 23.8% and ROCE at 31.5%, reflecting efficient capital utilization. Debt-to-equity ratio of 0.01 indicates a virtually debt-free balance sheet. Quarterly PAT improved from ₹1,126 Cr. to ₹1,393 Cr., showing a healthy 15.7% growth. Dividend yield of 3.00% provides attractive shareholder returns. EPS at ₹240 highlights strong earnings power.
📊 Valuation Indicators: Current P/E of 22.9 is slightly below the industry average of 27.2, suggesting fair valuation. Book value of ₹1,051 against CMP of ₹5,502 implies a P/B ratio of ~5.2, which is reasonable for a market leader. PEG ratio of 0.99 indicates valuation is aligned with growth prospects. Intrinsic value appears close to CMP, suggesting balanced risk-reward at current levels.
🏢 Business Model & Competitive Advantage: Hero MotoCorp is India’s largest two-wheeler manufacturer, with strong brand equity, extensive distribution network, and cost-efficient manufacturing. Its competitive advantage lies in scale, rural penetration, and trusted brand image. Diversified product portfolio across motorcycles and scooters ensures recurring demand and resilience against market cycles.
💰 Entry Zone Recommendation: Considering DMA 50 at ₹5,694 and DMA 200 at ₹5,232, the stock is trading slightly below short-term averages but above long-term support. A favorable entry zone would be ₹5,200–₹5,400 during corrections. Current levels are fairly valued, offering moderate upside potential.
📈 Long-Term Holding Guidance: Hero MotoCorp remains a fundamentally strong company with robust returns, low debt, and attractive dividends. Long-term investors can hold confidently, while new investors should accumulate gradually on dips for better risk-reward balance.
Positive
- Strong ROE (23.8%) and ROCE (31.5%) reflect efficiency.
- Debt-to-equity ratio of 0.01 ensures financial stability.
- Quarterly PAT growth of 15.7% shows earnings momentum.
- Dividend yield of 3.00% provides attractive income.
Limitation
- P/B ratio (~5.2) indicates relatively expensive valuation.
- Stock trading below DMA 50 shows short-term weakness.
- MACD at -92.9 indicates bearish technical momentum.
Company Negative News
- Marginal decline in DII holdings (-0.04%) signals reduced domestic institutional support.
- Stock trading below DMA 50 indicates near-term weakness.
Company Positive News
- Increase in FII holdings (+0.67%) reflects foreign investor confidence.
- Quarterly PAT improved from ₹1,126 Cr. to ₹1,393 Cr.
- Strong dividend yield supports investor sentiment.
Industry
- Two-wheeler industry benefits from rising rural demand and urban mobility needs.
- Industry P/E at 27.2 suggests peers trade at slightly higher valuations.
- Competition from Bajaj Auto, TVS Motor, and Honda keeps pricing pressure high.
Conclusion
⚖️ Hero MotoCorp is a fundamentally strong company with excellent return ratios, low debt, and attractive dividends. Valuations are fair compared to industry peers. Long-term investors can hold confidently, while new investors should look for entry around ₹5,200–₹5,400 to optimize returns.
I can also prepare a peer comparison HTML snippet against Bajaj Auto and TVS Motor to highlight relative strengths and weaknesses if you'd like.