Forming a Contrarian View on Hero MotoCorp Against Market Consensus
Built an independent investment thesis on the Indian two-wheeler sector backed by rural demand data, EV ecosystem analysis, and margin expansion signals
Tanvi Prakash
Deal Associate at Global Bharat Fund
From their time as
Financial Research Intern
Motilal Oswal Financial Services Ltd • 2025 - 2025
Overview
When Tanvi was building her equity research on Hero MotoCorp, the broad market consensus was bearish. The prevailing view held that Hero faced structural market share loss due to slow EV adoption relative to players like Ola and Ather, which were gaining prominence in the Indian market.
The Story
When Tanvi was building her equity research on Hero MotoCorp, the broad market consensus was bearish. The prevailing view held that Hero faced structural market share loss due to slow EV adoption relative to players like Ola and Ather, which were gaining prominence in the Indian market.
Tanvi formed a different view. Her thesis was that Hero's core entry-level segment was positioned for a cyclical recovery, and that the market was mispricing its EV business.
Data Point One: Rural Demand
She looked past urban retail data and headline macro indicators. Instead, she examined rural demand patterns and monsoon cycle data, which pointed to strong and growing demand in the 100cc to 125cc segment. The post-COVID shift had accelerated rural purchasing, and that segment was not in structural decline.
Data Point Two: EV Ecosystem Positioning
Rather than evaluating Hero's EV strategy purely on month-on-month market share, she analyzed the ecosystem footprint of Vida, Hero's EV brand. Her DCF model showed that the market was assigning negative value to the EV business, effectively ignoring Vida's distribution scale and holding value only against Ather. She saw this as a mispricing.
Data Point Three: Margin Expansion
She tracked raw material cost trends and EBITDA margin dynamics. Her analysis showed significant scope for margin expansion, which could drive ROE recovery even at lower volume growth rates.
The three data points together supported a positive view on Hero at a time when consensus was negative.