Mumbai: Shares of Hero MotoCorp climbed over 2% after the country’s largest two-wheeler manufacturer reported stronger-than-expected earnings for the first quarter of FY27, prompting global brokerages Morgan Stanley and Citi to reaffirm their bullish outlook on the stock. The company’s robust revenue growth and profit beat helped offset concerns over margin pressure caused by rising raw material costs.
Investors welcomed the quarterly performance, with analysts highlighting Hero MotoCorp’s healthy demand, expanding premium portfolio and improving electric vehicle strategy as key growth drivers for the coming quarters.
Strong Q1 earnings beat estimates
Hero MotoCorp reported a 35.7% year-on-year increase in standalone revenue to Rs 12,999 crore, surpassing market expectations of around Rs 12,430 crore.
Standalone net profit rose 29% to Rs 1,454 crore, compared with Rs 1,126 crore in the corresponding quarter last year, while EBITDA increased 25% to Rs 1,727 crore. Although EBITDA met Street estimates, the EBITDA margin narrowed to 13.3% from 14.4% a year earlier due to higher commodity costs.
Shares rise after results
Following the earnings announcement, Hero MotoCorp shares gained more than 2–3% in early trade as investors reacted positively to the better-than-expected financial performance.
The market viewed the earnings beat as a sign that the company continues to benefit from healthy domestic demand and an improved product mix despite inflationary pressures affecting input costs.
Morgan Stanley remains optimistic
Morgan Stanley maintained its positive stance on Hero MotoCorp after reviewing the quarterly numbers.
The brokerage said the company’s cost-control initiatives, premiumisation strategy and improving product mix should help cushion the impact of higher raw material prices. It also believes Hero is well placed to benefit from improving rural demand and stronger festive season sales.
Citi sees further upside
Citi also reiterated its bullish view on the stock following the results.
According to the brokerage, Hero MotoCorp’s volume-led revenue growth, resilient pricing strategy and expanding premium motorcycle portfolio continue to support long-term earnings growth. Citi also highlighted the company’s electric mobility initiatives, particularly the VIDA V2 Pro, which recently secured production-linked incentives and could contribute meaningfully to future volumes.
Margin pressure remains a watchpoint
Despite the strong earnings performance, analysts cautioned that rising commodity prices continue to weigh on profitability.
Core margins contracted by around 300 basis points because of higher raw material costs, partly linked to geopolitical developments affecting global commodity markets. However, brokerages believe Hero’s ongoing cost optimisation measures should help limit further pressure.
Focus shifts to festive season
Analysts expect the upcoming festive season to be an important catalyst for Hero MotoCorp.
With improving rural sentiment, stable financing conditions and continued demand for premium motorcycles and scooters, brokerages believe the company is well positioned to strengthen its market share in the second half of FY27. Investors will also closely monitor the performance of Hero’s electric vehicle business over the coming quarters.
Analyst sentiment stays positive
According to market data cited by Reuters, 33 analysts currently rate Hero MotoCorp a “buy”, with a median target price of around Rs 5,861.
The consensus reflects confidence that the company’s improving sales mix, premium products and EV expansion can support sustainable earnings growth despite near-term cost challenges.
Conclusion
Hero MotoCorp’s better-than-expected first-quarter results have reinforced investor confidence, pushing the stock higher and prompting Morgan Stanley and Citi to maintain their positive outlook. While commodity inflation continues to pressure margins, analysts believe the company’s strong demand, disciplined cost management and expanding premium and electric vehicle portfolio position it well for sustained growth through FY27.