Hero MotoCorp's Sharp Decline: Why Investors Might See 15% Downside (Investor Alert)

Hero MotoCorp's shares have been on a downward spiral, falling for the fifth consecutive session. The stock slid as much as 5% to an intraday low of Rs 5,524, after a prominent brokerage firm cut its rating to Underperform and lowered its target price. This downward trend has resulted in the stock shedding about 8% over the past five sessions.

Why are Analysts Bearish on Hero MotoCorp?

The brokerage firm has lowered its target price to Rs 4,950 per share, implying a downside potential of 15% from current market levels. This revision is based on several factors affecting the two-wheeler industry and Hero MotoCorp's performance.

Key Factors Affecting Hero MotoCorp's Stock

• GST 2.0 Boost Fading: The initial boost from the GST cut in September has started to fade, with two-wheeler registrations growing only 2% on-year from April to July. Although the industry witnessed a 26% rise in volume over August-October, registrations have again turned flattish in November and the first half of December.
• Market Share Woes: Hero MotoCorp's domestic two-wheeler wholesale market share has steadily eroded, sliding from 36-37% during FY17-FY21 to about 28% in April-November 2025. This marks a 25-year low for the company.
• Correction-Induced Rally Unsustainable: The sharp rally in Hero MotoCorp's stock appears largely valuation-led and potentially unsustainable. The near 40% gains can be attributed to an expansion in the one-year forward price-to-earnings multiple, rather than an improvement in the one-year forward earnings outlook.

Brokerage Firm's Revised Estimates

The brokerage firm has cut its FY26-28E EPS estimates for Hero MotoCorp by 2-7%, mainly due to lower volumes. It expects a moderate 5% volume and 8% EPS CAGR over FY26-28E. The firm prefers Eicher Motors and TVS Motor Company in the two-wheeler space, citing expensive valuations for Hero MotoCorp at 20x FY27E PE.

Remember, this is a perspective, not a prediction. It's essential to do your own research and consider multiple viewpoints before making any investment decisions.