Hero MotoCorp Ltd, India's leading two-wheeler manufacturer, has staged an impressive comeback in the second quarter of fiscal year 2026, triggering a wave of earnings upgrades and a significant stock rally. This performance marks a sharp reversal from the operational challenges that plagued the company's first quarter.
A Robust Quarterly Performance
The company reported a better-than-expected revenue growth of around 16% year-on-year, reaching ₹12,126 crore. This strong performance was largely fueled by a sustained recovery in rural demand and a series of successful new product launches. Investor confidence was visibly restored, with the stock rising by 4% to hit a new 52-week high of ₹5,775 on Monday, November 17, 2025.
A key highlight was Hero MotoCorp's continued dominance in its core segment. The company delivered a second straight quarter of market-share gains in the 100–125cc motorcycle category. After years of underperformance in a market increasingly leaning towards premium models, the sustained rural revival this fiscal year has perfectly aligned with Hero's strengths.
Drivers of Growth and Expansion
The company's legendary entry-level models, Splendor and Passion, were the workhorses behind an 11% year-on-year volume growth and a 4% rise in realisations. As the industry-wide share of entry-level motorcycles increased from 7.9% in Q4FY25 to 9.2% in Q2FY26, Hero extended its lead.
Its growth was multi-faceted:
- Product Portfolio: While the Splendor remains the anchor, newer launches like the HF Deluxe Pro and Glamour X have bolstered the lineup. The premium XPulse model saw a remarkable 31% rise in volumes.
- Exports: Hero's international business surged, with exports growing by a massive 77% year-on-year, which is three times the industry's growth rate.
- Electric Vehicles: Momentum in the EV space remains robust. The VIDA Vooter VX2 has been instrumental in helping Hero capture 6.8% of the EV market share within a year. The company now commands 11.7% of the overall EV market and over 20% in top-tier cities.
Higher revenue and improved operational efficiencies pushed the company's Ebitda margin up by 50 basis points to 15%, although gross margins remained flat due to mixed raw-material trends.
Future Outlook and Looming Challenges
The full impact of the festive season, boosted by the GST 2.0 reforms, was evident in October, when Hero logged 1 million in retail sales and expanded its market share to 31.6%. The management is optimistic, expecting the GST benefits to boost demand for the next 2-3 years, drawing parallels with excise cuts of the past. The industry is projected to clock 8-10% growth in the second half of FY26.
However, the road ahead is not without risks. The stock, which has jumped nearly 30% since July, now trades at a P/E of 19.6x based on Motilal Oswal's FY27 estimates. While this valuation is not considered demanding, analysts caution about intense competition in the electric vehicle space and the upcoming leadership transition under a new CEO in 2026.
A Nomura Global Markets Research report from November 15 has tempered expectations, reducing Hero’s volume growth estimates to 6%, 5.6%, and 5% for FY26, FY27, and FY28, respectively. The report also highlighted a potential risk: the implementation of anti-lock braking systems (ABS) could disproportionately impact the 100cc segment, which constitutes about 87% of Hero's sales.
Despite these headwinds, subject to a sustained rural recovery, Hero MotoCorp's fortunes appear to be on an upward trajectory, supported by new launches and a growing pool of first-time buyers.
