Why did Hero MotoCorp stock crash 5% today? Here’s the reason

Synopsis: Hero MotoCorp plunged sharply today after Jefferies cited business risk concerns, citing fading demand, valuation concerns and a hit on its market share during the same period.

The shares of one of the largest motorcycle manufacturers in India are in focus after Jefferies flagged key risks in its business. In this article, we will dive more into the details of it.

With a market capitalisation of Rs  1,13,346 crore, the shares of Hero MotoCorp Ltd made a day low of Rs 5,524.55 per share, down 5 percent from its previous day’s closing price of Rs 5,813.45 per share. Over the past five years, the stock has delivered a return of 81 percent, underperforming NIFTY 50’s return of 87 percent.

Analyst Comments

Hero​‍​‌‍​‍‌​‍​‌‍​‍‌ MotoCorp shares declined on Thursday following a bearish report by a leading global brokerage, Jefferies. The brokerage has downgraded Hero Motocorp from “Hold” to “Underperform” and has slashed its target price to Rs 4,950 per share from Rs 5,550, signalling a further downside of 15 percent from its previous day’s closing price.

Demand Boost Fading: Jefferies​‍​‌‍​‍‌​‍​‌‍​‍‌ expressed that the recovery of the two-wheeler market is still not consistent across the board. The reduction in GST, which gave a push to the demand, has faded more quickly than was anticipated. Though the wholesales for FY25 are still hovering around 6 percent under the FY19 levels, FY26 started on a low note with registrations only increasing by 2 percent YoY in the period from April to July. The reduction in GST in September resulted in a very short-lived increase in volumes, which went up by 26 percent between August and October. However, registrations have levelled off again YoY in November and December MTD (month-to-date) after the sharp rise, and thus, the momentum of GST-driven demand is getting ​‍​‌‍​‍‌​‍​‌‍​‍‌weaker.

Market share slipping: Jefferies​‍​‌‍​‍‌​‍​‌‍​‍‌ pointed out that Hero MotoCorp is facing continuous pressure in terms of market share. The domestic wholesale market share has been decreasing from 36–37 percent in FY17–FY21 to around 28 percent in April–November 2025, which is the lowest in 25 years. 

However, Hero is still holding the lead in the entry-level motorcycles segment and has got some traction in the EV segment in FY26, but the demand for the transition of entry-level bikes is going down, while the losses in the 110–125 cc segment and ICE scooters are increasing, resulting in a decrease in the company’s performance.

Concerning registrations, the gains were seasonal, and the market share grew from 27 percent (Apr–Sep) to 33 percent (Oct–Nov), but it dropped drastically to 21 percent in December MTD. The FY26 YTD registration share is at 29 percent, which is close to FY25 and far below 36 percent in FY21, thus, implying that there is no structural ​‍​‌‍​‍‌​‍​‌‍​‍‌recovery.

Valuation concerns: Jefferies​‍​‌‍​‍‌​‍​‌‍​‍‌ felt that the recent rally of Hero MotoCorp’s stock looks to be mostly a valuation play and hence unsustainable. The stock has rallied by approximately 40 percent this year. It added that nearly two-thirds of the rally has been due to the expansion of the forward P/E multiple, while only about one-third has been supported by the improvement in earnings. 

EPS​‍​‌‍​‍‌​‍​‌‍​‍‌ forecasts for FY26 and FY27 have gone up by just 1 percent this year, despite the GST reduction, signalling that earnings have remained weak. In its downgrade move, Jefferies reduced the EPS estimates for FY26–FY28 by 2–7 percent, mainly due to lower volumes and is currently anticipating 5 percent volume CAGR and 8 percent EPS CAGR during the period, with its projections being 2–6 percent lower than the Street, thus supporting the view that valuations are front-running the ​‍​‌‍​‍‌​‍​‌‍​‍‌fundamentals.

Financial and Other Highlights

Hero MotoCorp Ltd reported a revenue from operations of Rs 12,218 crore in Q2 FY26, a growth of 17 percent as compared to Rs 10,483 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it grew by 26 percent from Rs 9,728 crore.

Regarding its profitability, it reported a net profit of Rs 1,321 crore in Q2 FY26, a robust growth of 24 percent as compared to Rs 1,066 crore in Q2 FY25. However, on a quarter-on-quarter basis, it declined by 23 percent from Rs 1,706 crore. 

Hero MotoCorp has reported a 31 per cent year-on-year (Y-o-Y) growth in total sales to 6.04 lakh units in November 2025, compared to 4.60 lakh units in the same month last year. The company’s domestic sales grew 30 percent to 5.7 lakh units from 4.40 lakh units, while exports jumped by a staggering 70 percent to 33,970 units, up from 20,028 units a year ago.

Hero MotoCorp is a multinational corporation with headquarters in India, and is the largest two-wheeler manufacturer in the world by volume. Since its founding in 1984, the company has expanded to become a multinational corporation with over 125 million riders and a presence in 48 countries. With an emphasis on innovation, sustainability, and growing its global presence, they manufacture a variety of motorcycles and scooters, including new endeavours in electric mobility under the VIDA brand. 

It has established industry standards in every market segment and provides a broad range of two-wheeler products, such as motorcycles and scooters.  Hero MotoCorp’s product line includes popular models like Karizma, Hunk, CBZ Xtreme, Super Splendour, Glamour Fi, Splendor+, Splendour NXG, Passion Plus, and more, which have completely changed the Indian two-wheeler market.

Written by Satyajeet Mukherjee

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