Hero MotoCorp stock falls despite strong May sales: What’s driving the sentiment?

Shares of Hero MotoCorp Limited (NSE: HEROMOTOCO) declined by 2.49% in early trade on June 2, 2025, settling around ₹4,202.10, even as the company reported a strong dispatch performance for May. Opening at ₹4,310.10, the stock touched an intraday low of ₹4,196.00, drifting away from its previous close of ₹4,309.30. Despite the upbeat business update, selling pressure dominated, with a higher sell quantity (73,155 shares) compared to the buy side (47,904 shares) during the morning session.

This price action suggests that investors may be exercising caution despite strong operational indicators. Broader index stability (with Nifty 50 remaining relatively flat) confirms that this was a stock-specific movement, not sector-wide contagion. Profit-booking, subdued exports, or concerns about margin expansion in electric vehicle (EV) operations could be contributing to short-term bearish sentiment.

What Do Hero MotoCorp’s May 2025 Numbers Say About Business Momentum?

Hero MotoCorp, the world’s largest manufacturer of motorcycles and scooters, dispatched 5.08 lakh units in May 2025, registering a year-on-year growth over the 4.98 lakh units dispatched in May 2024. This figure includes 4.75 lakh motorcycles and 32,537 scooters, showing steady demand across both product categories.

Domestic sales reached 4.89 lakh units, supported by 5 lakh VAHAN registrations (excluding Telangana), a proxy for actual customer deliveries. Exports came in at 18,704 units, nearly flat year-over-year but showing slight sequential improvement.

In cumulative terms, Hero MotoCorp has dispatched 8.13 lakh units in FY26 year-to-date (April–May), still trailing the 10.3 lakh units sold in the same period last fiscal. This discrepancy may reflect a temporary Q1 lag rather than a long-term trend, especially with Q2 seasonality often favoring stronger two-wheeler sales.

How Is Hero’s Electric Scooter Brand VIDA Performing in 2025?

Hero’s EV brand, VIDA, powered by Hero MotoCorp, is gaining measurable traction. In May 2025, the company dispatched 8,361 VIDA V2 electric scooters and recorded 7,161 VAHAN registrations, accounting for a 7.2% market share within India‘s electric scooter segment tracked by VAHAN.

This indicates an encouraging consumer response, especially in urban centers targeted via campaigns during IPL 2025. VIDA’s recent “Charging Simple Hai” campaign emphasized plug-and-play flexibility by highlighting the scooter’s removable battery, chargeable via any 5-amp socket.

In a highly competitive EV market facing price-sensitive consumers, VIDA’s product-led positioning has so far resonated with the target demographic. However, scaling remains a challenge. Investors are awaiting the July 1, 2025 VIDA product launch, which could serve as a key catalyst for both unit expansion and market sentiment.

What Is Driving Institutional Sentiment Around Hero MotoCorp in June 2025?

While fundamentals remain strong, market participants appear to be managing expectations more conservatively. Analysts at several brokerages noted that Hero MotoCorp’s adjusted P/E ratio of 19.00x is within historical norms but lacks catalysts for near-term rerating unless margins improve or exports accelerate.

From an institutional sentiment standpoint, the higher sell volume on June 2 suggests early signs of rotation, possibly from auto counters to sectors with stronger near-term earnings momentum like IT or BFSI. The deliverable quantity at 62.21% shows genuine long-holding interest remains, although recent trades show increased speculative churn.

Technical analysts have noted that the stock remains within its regulatory band (₹3,878.40–₹4,720.20), but its current price is closer to the lower bound. The broader market continues to watch whether Hero MotoCorp can retest resistance levels near ₹4,500 in the absence of fresh institutional flows.

Is Export Growth Still a Weak Link for Hero MotoCorp?

Export volumes remained flat at 18,704 units in May 2025, compared to 18,673 units in May 2024. Year-to-date export numbers at 35,586 units continue to lag behind 38,962 units in the same period of FY25, implying a potential area of concern.

Company insiders believe the global demand environment—particularly in Bangladesh and Colombia—is gradually improving, but logistical issues and currency fluctuations are slowing recovery. Hero’s management remains optimistic about a stronger H2 FY26 export performance, aided by refreshed product pipelines and distribution restructuring in key LATAM markets.

Analysts believe that unless exports meaningfully contribute to revenue diversification, Hero’s valuation will remain disproportionately tied to Indian rural and urban market cycles, exposing it to seasonality and fuel price fluctuations.

How Are Premium Motorcycle Plans and Motorsports Affecting Brand Positioning?

One underappreciated aspect of Hero MotoCorp’s evolving strategy is its premium segment expansion through the Premia retail network, which now spans over 100 outlets across India. This initiative is crucial for improving average selling prices (ASPs) and repositioning the brand beyond the commuter bike tag.

Additionally, Hero MotoCorp is leveraging Hero MotoSports Team Rally for international brand enhancement. Notably, at the South African Safari Rally, team rider Ignacio Cornejo secured a 6th place finish, while Ross Branch, despite a fall, finished 11th, continuing the company’s performance consistency in FIM rallies.

These motorsports initiatives, while not yet contributing to significant revenue, bolster brand equity, especially among younger and premium-oriented consumers. Over time, this positioning could aid transitions to higher-margin vehicles, including performance EVs.

What Is the Broader Two-Wheeler Sector Context in India Right Now?

India’s two-wheeler sector has been on a path of cautious recovery after a prolonged slowdown during 2022–23. Factors like rural demand normalization, fuel price stabilization, and increased financing availability have revived volumes across the board in FY25 and early FY26.

However, the sector remains bifurcated. While commuter motorcycles remain volume leaders, growth is increasingly being driven by scooters (especially electric), premium bikes, and urban-centric mobility solutions. This aligns well with Hero MotoCorp’s refreshed product roadmap and its VIDA-led EV bets.

Peers like TVS Motor, Bajaj Auto, and Ola Electric are intensifying their presence in both ICE and EV formats, increasing the pressure on Hero to accelerate product innovation, localization, and service infrastructure.

What Can Investors Expect in the Coming Months?

In the quarters ahead, investor attention is likely to converge on multiple strategic milestones that could define Hero MotoCorp’s FY26 trajectory. The upcoming launch of a new VIDA electric scooter on July 1, 2025, stands out as a potential inflection point. If the product meets expectations in terms of pricing, performance, and adoption, it could meaningfully reset Hero’s EV narrative in a competitive landscape. Alongside this, management will be under pressure to demonstrate sequential gains in export volumes, particularly as logistical headwinds ease and macroeconomic conditions stabilize in key markets such as Bangladesh and Colombia.

Another area of growing investor interest is the company’s premium motorcycle push through its expanding Premia retail network. Early signs of traction here could help improve Hero MotoCorp’s average selling prices and margin mix. Additionally, market participants will be watching for greater visibility in Q2 FY26 earnings, especially around how the company is managing cost structures, improving product mix, and defending profitability amidst input cost fluctuations. Together, these factors will shape market sentiment and determine whether the stock can reclaim higher valuation multiples through the remainder of the fiscal year.