Bajaj Auto vs Hero MotoCorp (2026): Margins, Exports, EVs, Growth & Which Is Better?

Bajaj Auto vs Hero MotoCorp financial comparison

Bajaj Auto had a record-like start to FY2027

The clean standalone numbers show strong growth even before considering the new consolidation effects.

Standalone revenue increased about 37% to ₹17,244 crore.

Standalone PAT increased roughly 42% to ₹2,983 crore.

EBITDA increased more than 40% and crossed ₹3,500 crore.

EBITDA margin improved to approximately 20.9%.

The quarter was driven by record exports, improving domestic demand, electric vehicles and commercial vehicles.

Bajaj's exports crossed 700,000 units during the quarter, a major milestone for a company whose international franchise is central to its economics.

Hero MotoCorp's Q1 was a volume recovery quarter

Hero's operating growth was also strong, but the margin story was less impressive.

The company sold approximately 16.77 lakh motorcycles and scooters, up 23% year on year.

Standalone revenue grew 36% to approximately ₹12,999 crore.

Standalone PAT increased 29% to around ₹1,454 crore.

EBITDA rose 25% to approximately ₹1,727 crore.

Yet EBITDA margin fell to about 13.3% from 14.4% a year earlier.

The company was growing quickly, but commodity pressure and investments in newer businesses reduced how much of that growth reached operating profit.

Why Bajaj earns the higher margin

Bajaj's business mix is structurally more diversified by geography and vehicle type.

The company sells motorcycles across India and a large network of international markets.

Its Pulsar franchise has meaningful premium positioning.

It operates a large three-wheeler business.

Chetak gives it established electric scooter exposure.

Electric three-wheelers give Bajaj another EV category where Hero does not have the same scale.

This mix can produce higher realisations and margins than an overwhelmingly commuter-bike-focused model.

Hero's core strength remains scale in everyday motorcycles

Hero MotoCorp's economic moat is built around mass-market reach, distribution, service and some of India's most entrenched commuter motorcycle brands.

Splendor remains one of the most recognisable motorcycle franchises in the country.

The company has spent decades building reach in smaller towns and rural markets where reliability, fuel efficiency, resale value and service accessibility influence purchase decisions heavily.

This scale makes Hero difficult to displace even when competitors grow faster in premium categories.

The challenge is that commuter motorcycles generally do not produce the same revenue per vehicle as premium bikes or three-wheelers.

Bajaj's export exposure is a major differentiator

Exports are not a side business for Bajaj Auto. They are a core part of the earnings model.

The company shipped more than 700,000 units overseas in Q1 FY2027, its best-ever quarterly export performance.

Growth was supported by Latin America, Asia and recovery across several African markets.

Export exposure creates diversification away from Indian two-wheeler demand and can benefit from favourable currency realisations.

It also introduces risks that Hero faces to a lesser degree, including foreign-exchange volatility, geopolitical disruption, local import policy and macroeconomic instability in emerging markets.

Hero is trying to make international business more important

Hero's international opportunity is much smaller than Bajaj's today, but management is actively expanding it.

The company has been increasing its presence across selected global markets and building a more premium portfolio rather than relying only on commuter motorcycles.

For Hero, successful international expansion could improve product mix and reduce dependence on Indian rural and commuter demand.

For Bajaj, global diversification is already established. Hero is still building that second leg.

Electric vehicles: Bajaj currently has the more mature business

Bajaj's EV exposure already contributes meaningfully to domestic revenue.

Electric scooters and electric three-wheelers accounted for roughly 30% of Bajaj's domestic revenue in Q1 FY2027.

Chetak production capacity is being expanded as demand grows.

Bajaj has also discussed future electric motorcycle development.

That gives it EV exposure across more than one vehicle category.

Hero's VIDA growth is faster because the base is smaller

Hero's electric business is expanding rapidly, with VIDA dispatches rising approximately 151% year on year in Q1 FY2027.

Management plans additional capacity as it scales the brand.

The important issue is not only unit growth.

Hero needs VIDA to become large enough that EV investment stops diluting group margins and begins contributing positively to earnings.

Hero disclosed in FY2026 that EV investments reduced the benefit of otherwise stronger ICE margins.

This is a normal transition cost, but investors should track it explicitly.

Hero currently has the stronger cash conversion

This is one area where the Bull Run data strongly favours Hero.

Hero's operating cash flow to net profit ratio is approximately 1.45x.

Bajaj's current ratio is only about 0.24x.

Bajaj's low current conversion deserves context because the group has experienced major changes in working capital, investments, financing subsidiaries and international consolidation.

Still, the difference should not be ignored.

Hero's FY2026 operating cash flow was also unusually strong at approximately ₹9,395 crore, helped by working-capital improvements.

Hero has the more conservative conventional leverage profile

Hero's debt-to-equity ratio is approximately 0.02, compared with Bajaj Auto at around 0.57 in Bull Run's current consolidated series.

The Bajaj ratio needs interpretation because Bajaj Auto Credit and other consolidated financial businesses borrow as part of normal operations.

That makes the group ratio look more leveraged than the manufacturing company alone.

Hero also has interest coverage above 90x in the current database, compared with Bajaj at about 12.5x.

Neither figure should be interpreted without understanding consolidated finance-company borrowings.

Bajaj has grown much faster over five years

The long-term sales-growth difference is substantial.

Bajaj Auto's five-year sales growth is approximately 17.8%.

Hero MotoCorp's is roughly 8.9%.

Bajaj's five-year profit growth is about 17.2%, compared with Hero around 14.5%.

EPS growth shows a similar pattern: approximately 18.1% for Bajaj versus 14.5% for Hero.

This stronger growth record helps explain why the market assigns Bajaj the higher valuation multiple.

But Hero currently has the higher ROCE

Hero's approximately 32.1% ROCE is slightly above Bajaj Auto's roughly 29.0%.

That is an important result because Bajaj's higher margins might lead investors to assume it also wins every capital-efficiency metric.

It does not.

Hero has historically operated an efficient manufacturing and dealer model with relatively low industrial capital intensity.

Bajaj's consolidated capital base now includes newer investments and financing operations that affect the comparison.

Valuation: Hero is dramatically cheaper

Hero MotoCorp trades at approximately 17.9x earnings compared with Bajaj Auto around 24.5x.

Both are below Bull Run's current automobile-industry P/E of approximately 36.6x.

Hero also trades at about 4.5x book value compared with Bajaj at roughly 7.4x.

The market is therefore charging a meaningful premium for Bajaj's faster growth, richer margins, international business and EV mix.

The question is whether those advantages are large enough to justify the premium from today's starting valuation.

Dividend investors get a very different proposition

Hero MotoCorp's current dividend yield is approximately 3.79%, versus about 1.45% for Bajaj Auto.

Hero declared a total FY2026 dividend of ₹185 per share, its highest ever, while maintaining a high payout orientation.

Bajaj also returned substantial capital to shareholders during FY2026 through dividends and a buyback programme.

But at current market prices, Hero provides the higher ongoing yield.

What has the stock market rewarded?

Bajaj Auto has substantially outperformed Hero MotoCorp over the latest year.

Bajaj is at its recorded 52-week high in Bull Run's current snapshot.

Hero is also trading well above its 200-day moving average.

Strong momentum can reflect improving business expectations, but it can also reduce the valuation cushion available to a new investor.

Bajaj Auto: what the current thesis rests on

Hero MotoCorp: what the current thesis rests on

Bajaj Auto vs Hero MotoCorp FAQs

Which company is bigger by market capitalisation?

Bajaj Auto, at approximately ₹2.89 lakh crore versus Hero MotoCorp around ₹97,443 crore.

Which stock is cheaper?

Hero MotoCorp on both current P/E and P/B.

Which has the higher EBITDA margin?

Bajaj Auto. Its Q1 FY2027 standalone EBITDA margin was approximately 20.9%, compared with Hero at about 13.3%.

Which has higher ROCE?

Hero MotoCorp in Bull Run's current data, at approximately 32.1% versus Bajaj at around 29.0%.

Which is stronger in exports?

Bajaj Auto. Exports exceeded 700,000 units in Q1 FY2027.

Which is stronger in electric vehicles?

Bajaj currently has the more mature EV revenue base through Chetak and electric three-wheelers. Hero's VIDA business is growing rapidly.

Which pays the higher dividend yield?

Hero MotoCorp, at approximately 3.79% versus Bajaj Auto at about 1.45%.

Research sources

• Bull Run current fundamentals, ownership and technical data
• Bajaj Auto official quarterly financial performance
• Bajaj Auto FY2026 annual report
• Bajaj Auto 2026 monthly sales reports
• Hero MotoCorp investor relations and Q1 FY2027 results
• Hero MotoCorp Q1 FY2027 investor presentation
• Hero MotoCorp annual reports