When it comes to investment in the Indian two-wheeler sector, Bajaj Auto and Hero MotoCorp are among the most identifiable names. Both have a large market presence, strong finances, and a track record of providing value to shareholders. Yet, as long-term investors, it’s important to look deeper at their financial performance, growth plans, market positioning, and future prospects in order to decide which stock is a better investment.
Here, we’ll contrast Bajaj Auto and Hero MotoCorp on different parameters so that you can make the right choice.
Financial Performance
Bajaj Auto
Revenue: During Q3 FY25, Bajaj Auto posted standalone revenues of ₹12,807 crores, 6% higher year-on-year.
EBITDA: The EBITDA of the company was ₹2,581 crores, with an EBITDA margin of 20.2%, having a 20%+ EBITDA margin for six consecutive quarters.
PAT: The profit after tax (PAT) was ₹2,100 crores, exhibiting robust profitability.
Cash Position: Bajaj Auto ended the quarter in a position of surplus cash worth ₹15,000 crores, reflecting a robust balance sheet.
Hero MotoCorp
Revenue: Hero MotoCorp had quarterly revenue of ₹10,211 crores, up 5% year-on-year.
EBITDA: The EBITDA of the company was at ₹1,476 crores, with the margin being at 14.5%.
PAT: PAT at Hero MotoCorp was at ₹1,203 crores, up 12% year-on-year.
Cash Flow: Cash generated from the operations of the company was very strong, along with cash management.
| Financial Metric | Bajaj Auto (Q3 FY25) | Hero MotoCorp (Q3 FY25) |
|---|
| Revenue | ₹12,807 crores (▲6% YoY) | ₹10,211 crores (▲5% YoY) |
| EBITDA | ₹2,581 crores (20.2% margin) | ₹1,476 crores (14.5% margin) |
| PAT | ₹2,100 crores | ₹1,203 crores (▲12% YoY) |
| Cash Position | ₹15,000 crores surplus | Strong cash from operations |
Verdict: Bajaj Auto enjoys a superior financial position with better revenue, EBITDA, and PAT. Its steady 20%+ EBITDA margin and healthy cash position make it a financially sounder company than Hero MotoCorp.
Market Capitalization
Bajaj Auto: According to the recent data, the market cap of Bajaj Auto is nearly ₹1.2 lakh crores.
Hero MotoCorp: The market cap of Hero MotoCorp is about ₹1 lakh crore.
Bajaj Auto has a higher market cap, reflecting its larger scale and stronger market presence.
Order Book and Market Share
Bajaj Auto
Market Share: Bajaj Auto enjoys a robust position in the 125cc+ segment, where it is a clear number two player. The company has also recorded its highest-ever market share in the electric vehicle (EV) portfolio, with EVs accounting for 22% of domestic revenue.
Exports: Bajaj Auto is a top export player, with a 27% increase in export volumes in Q3 FY25. Latin America and Africa are the growth drivers.
EV Portfolio: Bajaj Auto’s EV portfolio, which consists of the Chetak electric scooter, is picking up pace, and it aims to increase its EV market share further.
Hero MotoCorp
Market Share: Hero MotoCorp leads the 100cc and 125cc segments with a market share of 32.8% in Q3 FY25. The company is also targeting premium and EV segments.
EV Portfolio: Hero MotoCorp’s EV brand, VIDA, is growing, with the addition of the V2 series. Its EV market share is still in nascent stages relative to Bajaj Auto.
Exports: Hero MotoCorp’s export acceleration is lower relative to Bajaj Auto and is domestic-focused.
Verdict: Bajaj Auto is more robust on the export side and has a more settled EV portfolio, with an advantage when it comes to future growth opportunities. Hero MotoCorp is more dominant in the entry-level market but still behind in EVs and exports.
Growth Strategy
Bajaj Auto
Priority Segments – Premium and EV: Bajaj Auto is intensely building up premium motorcycle lines (Pulsar, KTM, Triumph) and EV presence (Chetak). Leadership of the EV two-wheeler and three-wheeler businesses is a vision of the company.
Exports: Bajaj Auto is building on its well-established export networks, especially in Latin America and Africa, for growth.
Technology: Bajaj Auto has set up Bajaj Auto Technology Limited (BATL) to deal with state-of-the-art technology, such as EVs, hybrids, and fuel cells.
Hero MotoCorp
Grow the Core: Hero MotoCorp is concentrating on consolidating its leadership in the 100cc and 125cc segments.
EV Leadership: Hero MotoCorp is investing in its EV brand, VIDA, and will increase its EV portfolio. But it is still in the nascent stage compared to Bajaj Auto.
Premium Segment: Hero MotoCorp is introducing new products in the premium segment (Xtreme 250R, Xpulse 210) to compete with Bajaj Auto and others.
Verdict: Bajaj Auto has a more diversified growth strategy, with an emphasis on premium motorcycles, EVs, and exports. Hero MotoCorp is good in the entry segment but is still developing its niche in premium and EV segments.
Future Outlook
Bajaj Auto
EV Growth: Bajaj Auto’s EV portfolio is likely to expand strongly, with new model launches and distribution expansion.
Exports: The export business of the company is likely to grow further, backed by robust demand in emerging economies.
Profitability: Bajaj Auto’s premium and EV focus, combined with its healthy financials, puts it on a strong path for long-term profitability.
Hero MotoCorp
EV Growth: Hero MotoCorp’s EV operation will expand but will need to take time in catching up with Bajaj Auto.
Indian Market: Its strong base in the entry level segment offers stable revenue but for long-term sustenance, it is important for premium and EV segments to expand.
Verdict: Bajaj Auto’s future is brighter, with an evident thrust on high-growth segments such as EVs and exports. Hero MotoCorp’s growth is largely based on how it can grow in premium and EV segments.
Challenges
Bajaj Auto
Export Volatility: The export operations of Bajaj Auto are exposed to currency and geopolitical volatility.
Competition: The firm is exposed to high competition in the premium and EV segments from local as well as global competitors.
Hero MotoCorp
EV Competition: Hero MotoCorp trails behind in the EV segment, with stiff competition from Bajaj Auto, Ola Electric, and others.
Dependence on Entry-Level Segment: The high dependence of the company on the entry-level segment exposes it to economic downturn and variations in consumer tastes.
Verdict: Both firms have challenges, but Bajaj Auto’s diversified product basket and robust export business offer more resilience than Hero MotoCorp’s reliance on the entry-level segment.
Final Verdict
Bajaj Auto is the superior long-term investment choice over Hero MotoCorp. Here’s why:
- Solid Financials: Bajaj Auto boasts superior revenue, EBITDA, and PAT, as well as a strong cash position.
- Diversified Growth Strategy: The company’s emphasis on premium motorcycles, EVs, and exports offers multiple growth drivers.
- Market Leadership in Exports: Bajaj Auto’s export business strength provides it with a competitive advantage in international markets.
- EV Leadership: Bajaj Auto leads the race in EV with a well-rooted portfolio and expansion plans underway.
Though Hero MotoCorp is a leader in the entry-level segment and has a leadership market share in India, its growth relies more on the domestic market and catching up in the premium and EV segments. For long-term investors seeking a more diversified and financially stronger company, Bajaj Auto is the better purchase.
Disclaimer: The article is meant for informational purposes only and not to be considered financial advice. Investors are encouraged to do their own research and seek the opinion of a financial advisor before deciding on investments.