HEROMOTOCO - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | HEROMOTOCO | Market Cap | 99,334 Cr. | Current Price | 4,965 ₹ | High / Low | 6,390 ₹ |
| Stock P/E | 18.5 | Book Value | 1,078 ₹ | Dividend Yield | 3.32 % | ROCE | 34.1 % |
| ROE | 25.9 % | Face Value | 2.00 ₹ | DMA 50 | 5,200 ₹ | DMA 200 | 5,259 ₹ |
| Chg in FII Hold | 1.72 % | Chg in DII Hold | -1.59 % | PAT Qtr | 1,401 Cr. | PAT Prev Qtr | 1,439 Cr. |
| RSI | 41.8 | MACD | -64.7 | Volume | 3,09,037 | Avg Vol 1Wk | 4,87,129 |
| Low price | 4,158 ₹ | High price | 6,390 ₹ | PEG Ratio | 0.78 | Debt to equity | 0.01 |
| 52w Index | 36.2 % | Qtr Profit Var | 29.6 % | EPS | 263 ₹ | Industry PE | 27.7 |
📊 Core Financials
- Revenue Growth: Quarterly PAT at ₹1,401 Cr vs ₹1,439 Cr, showing slight decline but overall 29.6% YoY growth.
- Profit Margins: ROE at 25.9% and ROCE at 34.1% indicate strong profitability.
- Debt Ratios: Debt-to-equity of 0.01 reflects negligible leverage.
- Cash Flows: Dividend yield of 3.32% provides attractive shareholder returns.
- Return Metrics: EPS of ₹263 highlights strong earnings power.
💹 Valuation Indicators
- P/E Ratio: 18.5 vs industry PE of 27.7, suggesting undervaluation.
- P/B Ratio: Price ₹4,965 vs book value ₹1,078, trading at ~4.6x book.
- PEG Ratio: 0.78, indicating fair valuation relative to growth.
- Intrinsic Value: Current price below DMA 50 (₹5,200) and DMA 200 (₹5,259), showing weak momentum but potential undervaluation.
🏢 Business Model & Competitive Advantage
Hero MotoCorp is India’s largest two-wheeler manufacturer with strong brand recognition, extensive distribution, and leadership in motorcycles and scooters. Its competitive advantage lies in scale, rural penetration, and consistent innovation. Strong ROE and ROCE reinforce operational efficiency.
📈 Entry Zone & Long-Term Guidance
Entry zone looks attractive around ₹4,700–₹5,000 given RSI (41.8) and MACD (-64.7) showing oversold conditions. Long-term holding is favorable due to strong fundamentals, brand leadership, and dividend yield, though near-term momentum remains weak.
✅ Positive
- High ROE (25.9%) and ROCE (34.1%) reflect strong efficiency.
- Dividend yield of 3.32% provides steady income.
- Low debt-to-equity ratio (0.01) ensures financial stability.
⚠️ Limitation
- Stock trading below DMA 200, reflecting weak technical momentum.
- Quarterly PAT slightly declined sequentially (₹1,439 Cr → ₹1,401 Cr).
📉 Company Negative News
- DII holding decreased (-1.59%), showing reduced domestic institutional support.
- Weak near-term momentum with RSI near oversold levels.
📈 Company Positive News
- FII holding increased (+1.72%), showing foreign investor confidence.
- Strong EPS of ₹263 supports robust earnings profile.
🏭 Industry
The two-wheeler industry in India is recovering with rising rural demand and urban mobility needs. Industry PE at 27.7 is higher than Hero MotoCorp’s 18.5, suggesting undervaluation relative to peers. Competition remains strong, but Hero’s scale and brand leadership provide resilience.
🔎 Conclusion
Hero MotoCorp demonstrates strong fundamentals with high returns, negligible debt, and attractive dividend yield. Despite weak near-term momentum, current price levels around ₹4,700–₹5,000 offer a good entry zone. Long-term holding is recommended for stability, dividends, and growth potential.
Would you like me to also compare Hero MotoCorp with peers like Bajaj Auto, TVS Motor, and Eicher Motors to evaluate relative strengths in the two-wheeler industry?