Two-wheeler stocks rally on demand surge: Are Bajaj, TVS, and Hero overvalued? – Stock Insights News

Two-wheeler stocks have received increased attention on Dalal Street with investors eagerly looking for signs of a revival in demand, in urban and rural areas.  In addition, with the government planning to revamp the GST structure, it is widely believed that the taxes on two-wheelers will come down substantially.

It’s no surprise that two-wheeler stocks have raced ahead on the Street – Bajaj Auto has gained nearly 7.3 % over the past one month to Rs 8,676 on Tuesday, and it has also risen substantially from its 52-week low of Rs 7,088 that was reached on 7 April 2025. 

Hero MotoCorp has also gained almost 18.3 % over the past one month to Rs 5,076 on Tuesday, and has risen from its 52-week low of Rs 3,322 that was reached on 7 April 2025. 

TVS Motor Company at Rs 3,271 on Tuesday is not too far from its 52-week high of Rs 3,315 that was reached 25 August 2025. The broader Sensex has been broadly flat over the past one month.

Investor sentiment for two-wheelers has also been buoyant with the anticipated revamp in GST structure – motorcycles below 350 cc have a 28% GST, and it is expected to be brought down to 18%. 

A Monsoon-Fuelled Rebound

The monsoon has been broadly strong across the country this year coupled with the RBI cutting repo rates and it has translated to lower auto loan rates. And signs of revival in two-wheeler sales are becoming visible. 

Pune-based Bajaj Auto’s sales in July 2025 grew 3% y-o-y to 366,000 units and it was better than 1% y-o-y growth to 11, 11, 237 units reported during the June 2025 quarter. 

New Delhi-based Hero MotoCorp also grew its July 2025 sales by 21.5 % y-o-y to 4,49,755 units, and it had reported a near 11 % y-o-y decline to 13.67 lakh units in the June 2025 quarter.

And Chennai-based TVS Motor Company’s sales grew by 29 % y-o-y to 456, 350 units in July 2025, it had grown its sales by 17.5 % y-o-y to 12, 76, 992 units in the June 2025 quarter.

Reading the June 25 Quarterly Report Cards

Bajaj Auto’s standalone total revenue from operations grew 5.5% y-o-y to Rs 12,584.5 crore in the June 2025 quarter while its net profit grew 5.4% y-o-y to Rs 2,096 crore. 

Meanwhile, Hero MotoCorp’s standalone revenue from operations fell 5.5% y-o-y to Rs 9,578.9 crore in the June 2025 quarter while its net profit was broadly flat at Rs 1,125.7 crore in the quarter.

TVS Motor Company performed much better than its peers – its standalone revenue from operations grew 20.4% y-o-y to Rs 10,081 crore in the June 2025 quarter while its net profit grew 34.8% y-o-y to Rs 778.6 crore in the quarter.

Are Valuations Racing Ahead of Reality?

Bajaj Auto trades at a P/E of about 28 times estimated standalone FY26 earnings, while Hero MotoCorp trades at a P/E of about 21 times estimated standalone FY26 earnings.

TVS Motor Company trades at a P/E of more than 40 times estimated standalone FY26 earnings.

Clearly, two-wheeler stocks are not cheap and the growth momentum over the next few quarters appears to be fully factored in. 

Disclaimer

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article. 

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