Motilal Oswal has maintained its positive rating on Hero MotoCorp with a target price of Rs 6,560 following the company's first-quarter fiscal year 2027 performance. The brokerage highlights robust revenue and profit growth driven by a 23% rise in sales volume. Investors may monitor how the company manages margin pressure from rising commodity costs while aggressively scaling its electric vehicle operations.
Motilal Oswal has reaffirmed its positive stance on Hero MotoCorp, setting a target price of Rs 6,560 per share. This update follows the release of the company's financial results for the first quarter of the 2026-27 fiscal year, which showed notable growth in both revenue and profit despite a challenging cost environment.
Financial Performance and Sales Growth
Hero MotoCorp reported a strong performance for the April-June 2026 period. Revenue from operations reached Rs 12,999 crore, representing a 35.7% increase compared to the same period last year. Net profit also saw a healthy rise, climbing 29.13% to reach Rs 1,454 crore. This growth was largely supported by a 23% year-on-year increase in two-wheeler sales, with total volumes hitting 16.77 lakh units.
Margin Trends and Input Costs
While the company's sales figures and top-line growth remain robust, operational margins have encountered pressure. The EBITDA margin for the first quarter was reported at 13.3%, which is lower than the 14.4% recorded in the corresponding period of the previous year. This contraction is primarily attributed to inflationary pressures on raw materials such as aluminum and steel.
Hero MotoCorp has stated a medium-term EBITDA margin target of 14% to 16%. Achieving this range will largely depend on the company's ability to manage input costs and effectively pass on price increases to consumers without hurting demand.
EV Strategy and Future Risks
A central focus of the company's future strategy is the electric vehicle (EV) segment. Management has outlined plans to triple its EV production capacity by the end of the 2027 fiscal year. While this expansion is aimed at capturing market share in the growing electric segment, it involves significant capital spending.
Looking ahead, investors may watch for several factors that could influence performance. First, the growth rate in the second half of the fiscal year may show some deceleration due to the high base effect from the previous year. Second, persistent commodity inflation poses a risk to profitability margins. Finally, the execution of the planned EV capacity expansion will be important, as the company works to balance these new investments with the profitability of its core internal combustion engine motorcycle business.