The year 2025 largely provided Indians with "treat yourself" budgets. According to Federation of Automobile Dealers Associations (FADA), the auto industry hit record sales of 28 million units (+7.7% y/y) in 2025. The two-wheeler (2W) segment led the charge, finally smashing the 20-million-unit ceiling with retail sales up 13.4% to 21 million units for the first time since pre-COVID peaks, growing by 13.4%. This spike was supported by inflation hitting an all-time low of 1.7% obver April to December 2025.
The rural population was hitting the showrooms in droves. Two-wheeler registrations rose 8.4%, overtaking the 6.8% urban growth. By October, it was a total rural takeover, with small towns and villages claiming a massive 61% of all bike registrations, as per FADA.
Dominating this landscape is Hero MotoCorp, an Indian multinational motorcycle and scooter manufacturer headquartered in Delhi. The homegrown Hero capitalized on the rural surge, reporting its highest-ever festive performance with 16.9 lakh units dispatched—a 16% y/y increase from the 14.6 lakh bikes they sold in the same window last year. according to its Q3 26 numbers.
Full throttle
Riding a wave of festive vibes and a rural comeback to hit its highest-ever quarterly revenue, Hero MotoCorp clocked a record INR 123.3bn in Q3 26—a 21% increase from the year before. The profit side looked just as healthy, with net profit (PAT) climbing 15% y/y to INR 12.8bn.
The real stars of the show were the Internal Combustion Engine (ICE) scooters, which saw a wild 55% growth thanks to the new Destini and Xoom refreshes. Global exports surged 41% as they started popping up in Italy, Spain, and France. On the electric front, their VIDA brand captured an 11% market share this quarter.
It wasn't all smooth running, though. The premium segment (250cc–350cc) hit a bit of a speed bump, ending the quarter with a disappointing 5% market share.
Management is hyped up for FY 27, betting that a mix of high-single-digit industry growth and their own INR 10bn–INR 15bn annual investment will keep the company zooming ahead of the pack. It’s easy to see why the market is bullish.
In overdrive
As of April 10, 2026, Hero MotoCorp’s stock is up 46.9%. Even though it’s currently trading around INR 5,386—a bit of a dip from its 52-week high of INR 6,390—the company still commands a heavy-duty market cap of INR 1.1tn ($11.4bn).
When it comes to valuation, the P/E multiple for 2026 earnings is sitting at 20x, a notch above its 3-year historical average of 18.7x. This suggests investors are pricing in some optimism.
The real chef’s kiss for long-term holders, though, is the dividend play. Expect a potential 3.4% dividend yield in 2026, which is expected to climb to 4% by 2028.
In the rearview
Hero MotoCorp sure is a giant but it has its own share of bumps in the road. First off is competition in EVs. While their VIDA brand is making strides, both nimble startups and big rivals like TVS are currently winning the electric race.
Then there’s the rural economy. Hero MotoCorp lives and breathes on budget bikes sold in the hinterland. If inflation stays high or monsoon rains are bad, rural pockets tighten up, and sales take a massive hit. Plus, they’re facing stiff competition in the premium segment—everyone wants a piece of the high-end market now. Toss in fluctuating raw material costs (like steel and plastic), and those profit margins could get squeezed pretty quickly.
