Prabhudas Lilladher keeps Accumulate on Hero MotoCorp and lifts target to Rs 5,850

what happened

According to TradingView, citing a Prabhudas Lilladher research report, Hero MotoCorp posted decent revenue figures for the second quarter of FY27. A better product mix and measured pricing each added about 5% to revenue growth. Operating leverage, the ongoing LEAP cost-savings program, premiumisation and growth in non-vehicle revenue supported profit.

Customers of 125cc motorcycles moved either to more fuel-efficient 100cc models, where the company gained share, or to higher-capacity bikes after the GST 2.0 rationalisation. The company continues to invest and expand its share, and Vahan data showed share gains every month of the quarter.

The broker estimates volume and realisation CAGRs of 4.7% and 5.6% over FY26-29E, with revenue, EBITDA and adjusted profit CAGRs of 10.5%, 9.3% and 9.3%. The target rises to Rs 5,850 from Rs 5,700 and is based on 16x P/E for September 2028E, plus a stake in Hero Fincorp valued at Rs 42 and a stake in Ather Energy valued at Rs 402.

why it matters

For the market, the key question is whether the company can hold its share in the 100cc segment without weakening margins. The broker's valuation leans heavily on its stakes in Ather Energy and Hero Fincorp, so moves in those shares feed directly into the target.

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