Hero MotoCorp Share Price Target, Emkay Sets Rs 4,900 - Should Buy or Sell?

Emkay Global Financial Services has reiterated a ‘Buy’ rating on Hero MotoCorp, maintaining its sum-of-the-parts (SoTP)-based target price of Rs 4,900. The bullish stance comes on the back of a stable Q4 operational performance, improving product mix, and an upbeat outlook for FY26, particularly in the electric vehicle (EV) segment.

For the uninitiated, the sum-of-the-parts (SoTP) valuation is a method of valuing a company by separately assessing the value of each of its business segments or divisions and then summing those values to arrive at the company's total value.

The valuation by Emkay implies an 18x multiple on FY27E core earnings, with an attractive dividend yield of 4.4%, positioning the stock below its long-term average one-year forward P/E.

"Hero's valuation remains compelling, backed by a strong dividend profile and consistent core performance," Emkay said in its latest report. The brokerage has factored in a 6% compound annual growth rate (CAGR) in core EPS for FY25–27.

Robust financial performance

Hero MotoCorp reported revenue of Rs 9,940 crore in Q4, up 4% year-on-year and ahead of street estimates. A 3% sequential rise in average selling prices (Rs 72,000/unit) and a healthy mix of vehicles and spares underpinned the growth. Spares revenue alone rose 11% YoY to Rs 1,550 crore.

The Pawan Munjal-led firm's EBITDA stood at Rs 1,410 crore, with a margin of 14.2%. The company’s ICE business maintained stable margins of 16.1%, while net profit grew 6% YoY to Rs 1,080 crore. Hero also declared a total FY25 dividend of Rs 165/share, compared to Rs 140 in FY24.

Also Read: Hero MotoCorp Q4 Results 2025: Two-Wheeler Maker Declares Rs 65 Dividend Alongside Quarterly Results - Check Record Date | Republic World

Growth drivers

Looking ahead, Hero expects the domestic two-wheeler market to grow by 6–7% in FY26, supported by a favourable macro environment. Emkay believes Hero is well-positioned to outperform the industry, aided by a recovery in rural demand, successful premium model launches, and improving EV traction.

Affordable EVs on track

Hero MotoCorp plans to launch two affordable EV models in July 2025, as part of a broader scale-up in the electric segment. Although the EV business remains loss-making (EBITDA margin of -95% in FY25), it has improved from FY24’s -155%, with breakeven targeted in a couple of years at a 25,000–30,000 units/month run rate.

Bottom line

Emkay’s confidence in Hero MotoCorp rests on its strong operating fundamentals, consistent margins (14–16% guided range), and a growing product portfolio across segments. With a stable retail performance despite temporary production halts and normalization of inventory, the brokerage sees long-term value in the stock at current levels.