Ladies and gentlemen, good day, and welcome to Hero MotoCorp Limited Q2 FY27 Earnings
Conference Call, hosted by PhillipCapital India Private Limited. As a reminder, all participant
lines will be in the listen-only mode, and there will be an opportunity for you to ask questions
after the presentation concludes. Should you need assistance during the conference call, please
signal an operator by pressing star, then zero on your touch-tone phone. Please note that this
conference is now being recorded.
I now hand the conference over to Mr. Amit Hiranandani from the PhillipCapital India Private
Limited. Thank you, and over to you, sir.
Amit Hiranandani:
Thank you, and good morning, everyone. Welcome to the Q2 FY27 Post Results Conference
Call of Hero MotoCorp. I would like to thank the management team of Hero MotoCorp for
giving us the opportunity to host this call.
I will now hand over the call to Mr. Nitin Vaid, who recently joined as Head of Investor Relations
team of Hero MotoCorp, to take this forward. Over to you, Nitin.
Nitin Vaid:
Thank you, Amit, and it's an absolute pleasure to be hosting my first earnings call for Hero.
Good morning, everyone, and welcome to the second quarter fiscal year ended March 31, 2027
Earnings Call. We put out a press release and an earnings presentation announcing the results
yesterday. A copy of the press release and the earnings presentation is now available in the
Investor Relations section of our website.
With us on the call today are Mr. Harshavardhan Chitale, our CEO; Mr. Vivek Anand, our CFO;
Mr. Ashutosh Varma, Chief Business Officer- India Business Unit; Ms. Kausalya Nandakumar,
Chief Business Officer- Emerging Mobility Business Unit; and Mr. Anuj Dua, Chief Business
Officer- Premium Business Unit.
Please note that our safe harbor statements are contained within our presentation and other
materials available on our website. These statements are important and integral to all our
remarks.
We will begin the call with opening remarks from Harsh and Vivek followed by a Q&A session.
And with that, let me hand over to Harsh.
Harshavardhan Chitale:
Thank you, Nitin, and welcome to Hero MotoCorp. Good morning, everyone, and welcome to
this earnings call. But before I begin with our prepared remarks on our business and financial
highlights, I would like to wish you all and your families a very happy and prosperous Diwali in
advance. And to those of you who are also celebrating Karva Chauth, best wishes on Karva
Chauth.
We ended H1 FY27 with a strong revenue growth of 28% and profit after tax growth of 16% Yo-Y. And Vivek will deep dive further into our financial performance for Q2 as well as H1 both
standalone as well as consolidated entity.
Let's begin with what we see happened in the industry as a whole. Q2 was another strong quarter
for the 2-wheeler industry, with VAHAN retail growing by over 27%. ICE grew 23% and EV
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at 82%. Growth continued to be broad based. And since this question gets asked often and it's
very topical right now, we see growth both in urban and rural markets. And when I look at
HMCL performance, actually our rural performance is equal or better than the urban
performance last quarter as well as in this quarter, quarter to date. For H1 FY27, this industry
growth translated also into strong retail growth of over 20% Y-o-Y. And for those of you who
want to understand the impact of pent-up demand of GST, what was the impact of that, to take
that impact away we also looked at what was the growth over a 2-year period. And over a 2-year
period, it was an 11% CAGR, which shows that industry as a whole has a healthy growth
momentum even after discounting the impact of a pent-up demand.
With the festive season underway, we do see demand fundamentals continue to hold up, and we
expect the industry as a whole to deliver mid to high single-digit growth during the festival
period, and we are seeing that already in the festival to-date performance.
Let's now move to Hero MotoCorp's operational performance. We continue to execute on our
key pillars of our business strategy of expanding market share in fast-growing segments of the
2-wheeler industry. And I'm happy to report that with that execution, we gained market share in
our ICE portfolio every month of the last quarter. So in all the 3 months, every month, we gained
VAHAN share. Our ICE retails outpaced industry growth, recording a strong growth of 24%
year-on-year during the quarter.
Now let me highlight some key drivers behind this performance. Scooter was a big contributor
of this growth and scooter portfolio continued to gain traction with the fifth quarter of year-overyear expansion in our market share. In some of the key markets of South, for example, which is
a big scooter market, our ICE scooter market share has now crossed 10% level, and we are
scaling our products to other regions rapidly. Our ICE scooter dispatches have grown 34% yearon-year in quarter 2 and for the full half year, the disparate growth has been in excess of 50%.
If you look at how the business mix of scooters has grown over the last 2 years, for the
corresponding quarters, when you compare them, our scooters and mix has now increased by 3
percentage points in our entire business mix.
Moving to 100cc motorcycles, and this is also a question we get quite often that you have a large
exposure as a company to this category, how is this category doing? Is it underperforming versus
the rest? In quarter 2, we see 10% growth in 100cc as a whole and in H1, we have seen 11%
growth. So this category also continues to expand and contribute to our business performance.
Splendor has grown at over 20%. And what's also interesting to note is Splendor's XTEC variant
which is the premium variant of Splendor now contributes to over 25% of Splendor volumes.
Moving to our EV portfolio. Retail in our VIDA grew by 105% year-on-year and now we've
gained 170 basis point market share in H1 of FY27. Earlier this fiscal, we had launched new
variants of our VIDA, the VX2 Go 3.1 kilowatt and VX2 Plus 4.4 kilowatt and both of these
products are bringing new set of customers in our dealerships.
We've also expanded our capacity to 30,000 units per month in September. And just to remind
everyone, we were at 15,000 units a month at the end of last fiscal. So we've already doubled
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the capacity and we are well on our way to take it to 45,000 units a month in quarter 4. And
looking at the demand that we see, we have already started further expansion as well, which will
take our capacity to over 80,000 units a month by quarter 2 of next financial year.
Our dealer inventory continues to be low we are working with a dealer stock of just about 1 day,
which shows that actually, we are still capacity constrained, and there is a strong demand for our
product even during this festival period.
Let's move to Parts business. Our Parts business recorded a revenue growth of 27% year-on-year
during the quarter. So this is a second quarter in a row where we see growth in excess of 25%.
And as you all know, this is a big contributor of our profitability. Growth was driven by
increasing volumes in our EV portfolio for parts, Harley-Davidson portfolio for parts as well as
accessories as well as parts and accessories performance also in our exports. Looking at this
growth momentum in our parts and accessories business, we announced the greenfield expansion
of our Global Parts Center 2.0, to cater to parts availability for both Indian and global markets.
And we are investing over INR700 crores in setting up a complete new automated parts center
and double our parts handling capacity from what it is right now.
Moving to Global business. This is one business where we did face some logistical challenges
in some of our key markets. We have a very high exposure to one of the Latin American country,
which unfortunately faced a devastating earthquake this quarter. And we did have issues in
dispatches and custom clearance in that market. We also saw a demand slowdown in Bangladesh
with sharp increase in fuel price due to the Gulf War that's ongoing. And both of them did impact
our dispatch or a wholesale growth in exports. However, we are enthused by the fact our retails
have grown by 19% during this period. So the retail momentum is strong. It's the logistic
challenges that came in our way of dispatch growth. However, we are confident to move back
to dispatch growth or a wholesale growth even in our exports in Q3.
Moving to our premium portfolio. As you all know, we carved out a premium business unit in
quarter 2, and we announced a new Chief Business Officer for this business unit, who is also on
this call and could answer some of the questions later in the Q&A. Under the new organizational
setup, we've recently launched 2 key product refreshes in October, Xtreme 160R and Xtreme
250R, and both of these motorcycles are the fastest in their respective segments and come with
a host of segment-first features. Our expense franchise with this portfolio continues its strong
growth trajectory, recording over 30% retail growth in the first year -- in the first half FY27 and
market share of over 35% in the adventure bike segment. We will continue to address the white
spaces in our premium portfolio through further launches and you can look for 3 to 4 key
launches in the remaining part of this financial year in our premium segment.
So in summary, overall, we are encouraged by the results that we are seeing in our -- and the
performance across our various strategic initiatives and our focus on fast-tracking execution
across each growth vertical. We will continue to invest in new products behind our key brands
and in capacity expansion.
With that, I will hand over to Vivek to walk us through our margin performance, cash flow
performance and so on. Vivek, over to you.
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Vivek Anand:
Hero MotoCorp Limited
October 29, 2026
Thank you, Harsh. Good morning, everyone, and thanks for joining our quarter 2 financial year
'27 earnings call. Let me start by extending festive greetings to all of you and your families. I
trust all have reviewed our financial statements and the investor presentation, let me walk you
through the financial performance for the quarter.
So starting with financial highlights. Our headline number for quarter 2 reflects strong top line
performance with revenue from operations at INR14,687 crores, up 21% year-on-year. EBITDA
grew 8% year-on-year to INR1,968 crores, while profit after tax stood at INR1,456 crores, up
5% year-on-year.
Total wholesale volume expanded by 10.5% year-on-year, driven by an 8.4% growth in our ICE
business and a robust 98% growth in EV business. This strong wholesale growth reflects strength
in the underlying demand trends across both urban and rural markets, as we prepare for the
ongoing festive season.
Revenue continued to outpace volume growth at 21% versus the 10% -- 10.5% wholesale
growth. This outperformance reflects portfolio premiumization led by an increasing share of ICE
and EV scooters and premium variants contributing a 5% positive mix impact, equally supported
by calibrated pricing.
Moving on to cash flow from operations in the quarter stood at INR2,159 crores, nearby doubling
over the prior comparable period, driven by optimization of working capital. Within working
capital, we had record receivables in the previous quarter -- record low receivables in the
previous quarter.
Moving to the consolidated results. Revenue for the quarter increased by 23% year-on-year to
INR14,971 crores, and PAT grew by 41% year-on-year to INR1,861 crores. Results for the
quarter include INR397 crores onetime gain from the equity consolidation of an associate
company following its capital raise via a QIP and private placement.
I'll move on to margins and cost management now. During quarter 2, the industry continued to
face headwinds from broad-based commodity inflation. As you know, it was across steel,
aluminum, plastic, rubber and freight which was further amplified by currency depreciation. To
mitigate these cost headwinds, we continued on our 4-point action plan.
Firstly, as you can see in our presentation, our mix now has a higher share of premium variants
supported further by strong revenue growth in our parts, accessories and merchandise business.
Secondly, we accelerated savings under our LEAP program, continued to curtail discretionary
spending and drive operating leverage. Thirdly, judicious pricing cross select models in select
markets. And finally, we worked aggressively on improving the unit economics of our EV
portfolio, and I'm happy to report that our VIDA business turned gross margin positive in the
quarter. This was achieved ahead of our earlier guidance.
At an aggregate level, while gross margin compressed by 30 basis points quarter-on-quarter,
strict overhead control and operating leverage drove a 10 basis point quarter-on-quarter
expansion in EBITDA margins to 13.4%.
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October 29, 2026
I'll briefly just talk about the EMBU business now. Our VIDA business maintained strong
operational momentum with retail volumes rising 74% year-on-year to 66,000 units in the
quarter. This was supported by our monthly production ramp up to 30,000 units in September
and portfolio diversification across broader price points.
VIDA business continued to improve on unit economics, resulting in business becoming gross
margin positive during the quarter. This led to INR70 crores optimization of spends over the
previous quarter. This was again possible through a series of initiatives, structured BOM cost
optimization, healthier margin across our new product launches, exploration of nonvehicle and
software revenue streams, judicious price increase across the portfolio and PLI accruals
amounting to INR63 crores recognized during the quarter.
Approximately 70% of our EV portfolio got PLI in the quarter, and I'm happy to report that we
have already received PLI certification for nearly 100% of our portfolio in October '26. I'll move
on to capex now. Turning to capital expenditure. We remain on track with our full year guidance
of INR1,500 crores. In half 1, we've already deployed close to INR600 crores towards our key
projects. We've already expanded our capacity in Splendor and have doubled our ICE scooter
capacity to 80,000 units per month.
Our EV capacity has also been increased to a run rate of 30,000 per month and we are actively
working to scale our production further to 45,000 by quarter 4. We've also expanded the
dedicated premium assembly line at our Neemrana facility. We are advancing the Phase II
expansion of our Global Parts Center 2.0 at Tirupati and expect the GPC 2.0 to be fully
operational by end of next calendar year.
Looking ahead to quarter 3 financial year '27, due to extended West Asia conflict and sustained
commodity price inflation, we expect input cost inflation pressure to persist. However, we will
utilize these through continued cost rationalization, accelerated LEAP savings program,
aggressive improvement in unit economics and judicious price actions.
Backed by these measures, we expect margins in quarter 3 to remain stable. Over the medium
term, our primary focus remains driving EBITDA growth while steadily progressing towards
our target EBITDA margin's corridor of 14% to 16%.
Going forward, our journey of investment behind growth will continue both in terms of capacity
expansion and brand building to support our premium, scooter, EV and global business portfolio.
Thank you once again for your time and continued support. On that note, let me open the floor
for Q&A. Over to you, Nitin. Thank you.
Nitin Vaid:
Thank you, Vivek. Anam, you may now open the floor for questions.
Moderator:
Thank you very much. We will now begin the question-and-answer session. The first question
comes from the line of Amyn Pirani from JPMorgan.
Amyn Pirani:
Actually, my first question was on exports. And like you rightly mentioned, you had some
challenges in some markets and because unlike your peers, at least at this stage, your export
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October 29, 2026
distribution is more concentrated towards specific regions, can you help us understand broadly
how the major markets or regions contribute, like how big is, say, Colombia or how big is Sri
Lanka, Bangladesh? I'm just asking because to help us get context.
Because right now, given your distribution, 1 or 2 markets having challenges can impact your
volumes, which doesn't happen with your peers. But at the same time, when those markets
normalize, the recovery can also be equally sharp. So some context there could be very helpful?
Harshavardhan Chitale:
No, I think great question, Amyn. I mean, so we have Colombia specifically close to 25% of our
exports business, so very high exposure, and so is in Bangladesh. And in both of them, we are
also very strong in terms of market share. So strong contribution to our exports with strong
performance or share in those markets. Now when those 2 happen to in the same quarter faced
some challenges, we were not able to compensate that with rest of the 50%.
We've been announcing expansions into different other countries, but we are yet to scale them
up to have good distribution and less portfolio concentration in exports. But the good news is,
we are already seeing recovery by the end of the quarter in both Colombia and Bangladesh, and
we continue to also expand our presence in the other markets where we went.
Amyn Pirani:
Great. That's very helpful. And then a follow-up on that would be, can you give us a broad time
line as to by when we could have a slightly more balanced distribution or which are the like 2 or
3 markets which could become very important, say -- apart from these existing markets, which
could become very important over the next, say, 12 to 18 months?
Harshavardhan Chitale:
Yes. No, so great question. We are looking at expanding in Brazil. In fact, as we had shared
earlier, we are also setting up a manufacturing facility in Brazil. And we also have a good
portfolio of flex-fuel vehicles, which is what is needed for that market.
So that's a big market we are expanding in. We are also increasing our presence in Mexico. So
both these are large Latin American markets when it comes to 2-wheelers. We're also expanding
through some new launches and new country openings in Africa.
That's a big market for some of the other peer companies, and we are extremely underrepresented
in Africa. So we would be expanding there, starting, in fact, with launches this month. So Africa
will be another territory of expansion.
Amyn Pirani:
Great. Good. And if I can just slip in 1 last question. On the domestic 125cc portfolio, I mean, I
think market share has improved, but it's still been a slow recovery, the way we see it. 100cc has
done very well but 125cc are also going to see a lot more introductions. So any context there?
Like, for example, how is the Xtreme doing? How should we expect the 125cc market share to
look going forward?
Harshavardhan Chitale:
No, I think I'll first give some comments and then hand over to Ashu, our Chief Business Officer
for India Business. So at H1 as a whole, we have grown 19% in 125cc. And as you rightly
pointed out, we've gained significant market share. But that category as a whole has not grown
or done that well relative to some other categories.
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And 100cc, some of the customers with the inflation increases in prices, plus also more focus on
fuel economics, fuel efficiency, we see some of them moving to 100cc and hence, you saw strong
momentum also in 100cc.
And some of them potentially moving up with the GST impact being favorable to 150cc, 160cc.
So probably some of that has impacted that category. But as you saw, we still grew 19% in H1
and gained share there. Now within that for our different brands, Ashu, do you want to give
some color.
Ashutosh Varma:
Sure. Thanks, Harsh. So overall, as Harsh said, Yes, we've had some significant market share
gains made in this category. From a brand perspective, Glamour with its new variants growing
north of 50%. That's been really a big shot in the arm. We have just launched a new variant with
ABS that has been very well accepted across markets. Xtreme, there are new variants as well
that we are just about to start, hopefully should be in line for Diwali and some of the new features
that we introduced in Super Splendor so that has been really accepted well, especially in the
geographies that Super Splendor does well, especially the rural market.
So we've been moving consistently up, moved from what number 3 to our number 2 position in
this space. We're very confident that with these new models, we will continue to gain share and
become stronger.
Moderator:
The next question comes from the line of Gunjan Prithyani from Bank of America.
Gunjan Prithyani:
My first question, just to have some numbers on the P&L clarified. Can you share the EV
revenues and the typical drag that you share at the EBITDA level, which has been at about
INR200 crores for the last couple of quarters. Can you give some sense on where we are on those
numbers, revenue and the drag? And also, if you can give some context on what was the
magnitude of commodity inflation we really saw in this -- in quarter 2?
Vivek Anand:
Okay. So your first question is on the EV drag you talked about. That's almost INR168 crores in
quarter 2, which is down from INR232 crores in quarter 1. And that's what, in my opening
statement, I called out that drag has actually come down by INR70 crores quarter-on-quarter. So
that's one. Secondly, the EV revenue during quarter 2 was INR1,000 crores, right. So that's the
second part. And the third part of your question was that what is the material inflation we've
seen. That's almost 1% quarter-on-quarter.
Gunjan Prithyani:
Okay. And just to be sure, this INR1,000 crores - PLI that we're getting right now is 6% roughly
and only 70% of the portfolio qualified for PLI. So as this revenue scales up, this should -- by
the exit of, what, fiscal '27, we should be reaching close to a 10% as a PLI contribution on the
revenues, is that the way to think about it? The portfolio also increases and the rates will also go
up. How do I think about the PLI?
Vivek Anand:
So you're right. This quarter, it's around INR63 crores. So that's almost 6.5% of our revenue for
this quarter. And that's covering almost 70% of our portfolio. As I said earlier, we now have PLI
certification for almost the entire portfolio. So starting quarter 3, you will see almost 13% of our
revenue right, translating into PLI benefit starting this quarter. And as we scale up, the amount
of benefit grows along with it.
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Gunjan Prithyani:
Hero MotoCorp Limited
October 29, 2026
Okay. Got it. That's helpful. And my second question is on the scooter capacity. You did call
out very clearly on the EV VIDA capacity. I mean on the ICE side, also, clearly, the traction has
been quite strong over the last couple of months. And in fact, the last month number was quite
strong. Can you give us some sense on the variants that are doing well? Where are we in terms
of the channel stock on the ICE scooter side? And where do we see the capacity expansion and
market share on ICE scooters specifically?
Harshavardhan Chitale:
Yes. So I think we, in the first half of the year, did speak of significant expansion in scooter -ICE scooter capacity as well to support this growth. So we had, in the first quarter, expanded
capacity of Destini. Then in the second quarter, we expanded capacity of our other brand Xoom.
And both put together, actually capacity expansion is nearly doubling on a year-on-year basis,
and that's how we are now close to 80,000 a month of that capacity.
Both the brands, Destini and Xoom have done very well in line with what we expected when we
went for that capacity expansion. Within that, Xoom 160, which is the Maxi scooter, let's say,
the SUV of the scooter portfolio, so to speak, actually is doing exceptionally well. There, our
channel stock has been hovering around single days. So we are, again, further defining and
boosting our capacity there.
Gunjan Prithyani:
Is the need to add more to this -- to the ICE scooter side? I mean are you seeing the demand like
it's almost been doubled, but is there you're seeing there's more appetite and the need to add
more to the ICE scooter as well?
Ashutosh Varma:
Clearly, Gunjan. Ashutosh here. Overall, I mean, we seem to be winning in the toughest
battleground, I mean, which are highly scooterized markets, gain in market share. So far this
year, we've had almost 160 basis point market share increase. And as I've said several quarters
of market share gain, Xoom 160 is doing really well for us across India. Of course, we are
ramping up capacities as we speak. Destini was the first one for the capacity to come, and that's
something that we have been able to spread across the country. The new variants Destini 110 is
doing really well in certain pockets, which are strong 110cc metal body markets. So I mean,
overall, strong traction, and we feel that the growth that we've been having so far, which is north
of 50% that should continue as we move forward.
Harshavardhan Chitale:
And on the question on further capacity expansion, Gunjan, you're right. On Xoom specifically,
we are further planning to expand capacity because we've also taken that model now in our
overseas market and it's seeing great traction in the markets outside India as well.
Gunjan Prithyani:
Got it. And it's good to actually see the scooter business scaling up over the last couple of
quarters.
Moderator:
The next question comes from the line of Chandramouli from Goldman Sachs.
Chandramouli:
First question is just a follow-up on exports. So you mentioned there are logistical challenges
and some single market issues that you had to cycle through during the quarter. But just as you
look ahead into the back half, how is the shipping situation panning out on the logistics? And do
you expect some of this lost wholesale volume to come back, just given the underlying retail
volume in these markets is holding up?
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Harshavardhan Chitale:
Hero MotoCorp Limited
October 29, 2026
Yes. We do expect getting back to growth. In fact, our expectation is to double-digit growth
back in Q3 and Q4. And the logistical challenges were not necessarily with availability of
container capacity, it was more with port and clearances in the market, which was impacted with
the earthquake. So it's now -- that operation is back to normal there. So we do see a quick
recovery there starting Q3.
Chandramouli:
Got it. That's helpful. Second question is just more of an industry question. We've seen midteens or high-teens volume growth in 2-wheeler industry in India in the first half of this fiscal.
Just as you head into the second half, I just wanted to understand what your thoughts are on what
should be the growth for the industry just considering that we're up against a slightly higher base
and what are you thinking about the volume of the industry in the second half?
Harshavardhan Chitale:
Yes. As we see today and our planning for the H2, we are looking at still mid to high single digit
in H2. Even ICE will be in growth with low single digit and EV will then take it to high single
digits for the industry. And as I see in the quarter, in the festival, which is a big period, we see
that momentum continue.
Chandramouli:
All right. That's helpful. And just last question is on the electric 2-wheeler business. It's
encouraging to see that over the past 3 to 4 months, there is a visible pickup in electric 2-wheeler
market share after the affordable electric 2-wheeler launch. So I just want to understand that
there has been some comments from some of your peers that there may be some update in
capacity given that there's been a spike in growth in the industry in the last few months. I just
want to understand how you're thinking about the surprising situation and your plans for the new
term on the electric 2-wheeler business?
Harshavardhan Chitale:
Yes. No, so right now, the industry as a whole is definitely capacity constrained. There is far
more demand. And as and when anyone brings on capacity online and if the product is good,
there is an immediate bump up in share. As we saw, for example, in September and October,
right now, October month-to-date, actually, our market share is hovering to close to 13.5%, 14%.
So further jump because our additional capacity came online. So this capacity constraint for the
entire industry definitely is a phenomenon. We are working to rapidly expand -- working with
us, our suppliers, key component suppliers, and that's how this 30,000 where we are, we see
moving to 45,000 in a matter of next few months.
And your other question of entry, etc. Interestingly, while we entered also with a fixed battery
pack, which was a more competitive price point wise -- we also introduced a very premium
variant, 4.4 kilowatt removable battery pack variant. And incidentally, that is doing the best. So
there is a lot of demand right now for our premium. And when I look at my business mix in EV,
actually my business mix is far more now premium. And that is also, hence, reflecting in the
non-product revenue. If you look at our investor deck on the website, actually, we are also
rapidly expanding our software subscription revenue through a pack called VIDA Edge. There
are also parts and accessories that are going with these premium EVOOTER. So we are seeing
good growth in the non-product revenue also in VIDA right now.
Moderator:
The next question comes from the line of Kapil Singh from Nomura.
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Kapil Singh:
Hero MotoCorp Limited
October 29, 2026
Sir, first question was just on the financials. We see that there is a fairly strong revenue growth
and volume growth for this quarter, but the other expenses have declined. So -- if you could just
talk us through how you've been able to realize these cost efficiencies and whether these are
sustainable? And when can we expect you to get back to the guided margin range of 14% to
16%?
Vivek Anand:
Okay. Thank you, Kapil. So the discretionary -- so the other expenses actually were largely
because of the discretion expense cut we've taken during quarter 2, right. So there were budget
cuts imposed to mitigate the impact of the material inflation. So that was the first part of your
question.
And moving to when do we expect our margins to come in our guidance range. So let me start
by just talking that the current phase of commodity continues to be volatile, as we all know, and
we all believe that will normalize. We are committed to progressing towards our medium-term
EBITDA range of 14% to 16%. As you know, we have a highly diversified business with an
improving mix towards higher premium variants and fast-growing PAM business, which we
briefly talked about.
We'll continue to improve unit economics of EV business, and I deeply talked about the progress
we made in the previous quarter. We continue to improve scale of global business. We'll
continue to accelerate LEAP savings, and we'll continue to do calibrated pricing actions. And
therefore, we expect to achieve our target range in the next few quarters as commodity cycle
stabilizes and raw material inflation returns to normalized levels.
Kapil Singh:
Okay, sir. And the other question was on rural demand. Sir, you alluded to it briefly. But if you
could, given the news flow we have heard on drought in South and also in Maharashtra, what
are you observing in rural markets? Is there a risk to grow there? Just some color there would be
helpful?
Ashutosh Varma:
Thanks, Kapil, for that question. Again, I'll reiterate what Harsh said, our rural demand is as
good, if not better, as the urban that we are seeing. In fact, some of the reasons that we think that
has kind of manifested is possibly before the onset of festive and before the onset of monsoon,
there were apprehensions of how El Nino will pan out. Fortunately, it hasn't been as bad as
people thought it would be. Yes, there are certain parts of the country that are facing a drought
situation. But if you look at, let's say, the overall sowing is almost there as it was last year, right.
So rural that way seems to be holding up really well. There are certain geographies where it's
holding up even better. And as the rest of the festive manifests, we expect this to become even
stronger and I mean -- and help us overall, Yes.
Kapil Singh:
Thank You. And best wishes for the festive season to the entire team.
Ashutosh Varma:
Thank you.
Moderator:
The next question comes from the line of Pramod Kumar from UBS Securities.
Pramod Kumar:
Yes. And my first question is on the entire volume margin conundrum because what we see or
what we experienced over the last few years is that Hero has been losing market share because
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Hero MotoCorp Limited
October 29, 2026
we are more indexed to the commuter motorcycle category and less to the more growing
categories, and you're doing a very good job, especially on EVs, I have to acknowledge, that the
kind of market share gains we have done. Kudos for that.
But if you can just tell me -- help me understand, as you take a call over the next 2, 3 years, the
road map for the company, what is the priority, the market share or the margin? Because given
that scooterization and EVs is just accelerating more and more as per your own statements, it
looks like it will cover the expense of the commuter category in terms of percentage of the pie
of the industry. I'm not necessarily saying that commuters will decline. But clearly, we'll
underperform on growth or the other category will grow faster, and we have challenges in many
of these categories. So how should one look at this conundrum, and historically, we've seen
many companies lose market share outright because that's very crucial for the company, the
stakeholders, everyone including the dealers.
So because I keep hearing that you're wanting to get back to margins of 14-plus and all very
quickly. But at the same time, I think we're seeing other expenses and a lot of discretion spends
being cut back, which may not necessarily be a great thing for investments on brands and
business. So I'm just trying to reconcile whether short term is what is important or you need to
take the unnecessary pain in the near term for the longer-term good of the company. So if you - Harsh, if you can just share your broad thoughts there...
Harshavardhan Chitale:
Sure. No, I think Pramod thanks for the question, which allows me to clarify, that's creating
doubt. Clearly, we are focused on growth and market share expansion. So we are not going to
compromise or cut down on investments needed for driving growth and market share expansion.
And you saw that in quarter 2 was a good example. Probably that was a quarter where we saw
the full manifestation of commodity cost hits that started end of February. Despite that, you saw
we were able to gain VAHAN share in every month of the quarter. So we have remained focused
in continuing to invest behind growth, and that's what we will do.
And Vivek mentioned over next few quarters, not short term is where we will get back and we
describe various levers that will make it happen. And those levers are not discretionary or
required investments behind growth. They are improving unit economics of products that's more
volume leverage. That's our LEAP cost saving, which is the BOM cost reduction program that
we run. Those are the levers, not cutting down on any investments needed for growth. So we are
super focused on driving growth and market share expansion.
Pramod Kumar:
Best of luck with that because it's normally very challenging to get everything right, but I think
absolutely no harm in trying. And the second question is on the festive trends because VAHAN
clearly is showing moderation across categories. And I think it's got to do with the super base of
last year as well and the El Nino. But how are you looking at retail trends from your vantage
point? And do you expect your retail market share to improve significantly from here? Because
at this point in time, we are tracking reasonable market share losses on a day-on-day basis, liketo-like a festive and the pace only gets punchier as you approach Dhanteras, Diwali.
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Hero MotoCorp Limited
October 29, 2026
So what's your read on the retail market share trends for yourself, particularly this festive given
that EVs up done well, premium continues to do well. So if you can just share your broad
thoughts.
And last one is over the next 2, 3 years, where do you see scooters plus EV as a category at the
industry level? It's currently around 41%. Some of your peers are calling out 45% and then 50%
by FY29. What is your assessment on the same, sir?
Harshavardhan Chitale:
Yes. So on the festive, definition of festive can vary by company depending on product and
geography mix. So for us, festival started with Ganesh festival. There was Onam, there was
Ganesh festival and so on and so forth. So our festival period actually runs over a 100-day period.
And festival to date, the way we are driving our festival performance, we've seen growth of 24%.
And this, by the way, is also a good way to look at it because it goes right from pre-GST impact
to post GST. Otherwise, one gets into this conundrum that right at the start of Navratra last year,
the new GST came into effect and there was a huge amount of pent-up demand that then
immediately resulted into sale last year, and that will skew the base. Hence, looking into this
broader period gives us a good indication, and we've seen a 24% growth on this broader
definition of festival. And there, we have not seen any share erosion. So I think it's a question of
what period you look at. And we do expect market share performance to further strengthen as
we go towards Dhanteras, which traditionally is a big period for us. So we don't expect concerns
there.
Coming to your second question, which is about the overall scooter mix. I mean it is definitely
an we put together, category has increased, and we do expect that increase to continue. Now
where would it go? Will it go 44, 45, 47, time will tell, but I don't want to speculate there. But
the trajectory of category share going up, we do endorse that.
Moderator:
The next question comes from the line of Arvind Sharma from Citigroup.
Arvind Sharma:
My first question would be on the premium bikes. While we are launching the Xtreme portfolio,
there have been a few brands or models which were there and then they've been kind of phased
out –Karizma is one of the name that comes up and some others as well. Premium bike market
share has always been something that you have alluded to being one of the key focus areas. So
will it just be the Xtreme or could there be more name plates, more models in the premium bike
segment because that is where the share is still low. That was my first question.
Harshavardhan Chitale:
Yes, at premium, we are looking at 4 brands as our drivers of growth, Xtreme is one, but also
Xpulse, which is the adventure bike or on-off roader. Then we also have Karizma, you would
also see some good refreshes and new category -- brand expansion kind of launches on Karizma.
And then, of course, Harley-Davidson, our co-developed products with our partnership with
Harley. So all the four, you will see new launches and portfolio expansion there.
Arvind Sharma:
Got it, sir. The second question would be on the EV segment. One, a new numerical clarification,
sir, last few quarters, you say about the margin drag on the business, and you call out the ICE
margin. So if you could just tell us what would be the like-to-like ICE margin? And then I'll
follow up with my question?
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Hero MotoCorp Limited
October 29, 2026
Harshavardhan Chitale:
Margin drag is about 220 bps, if you were to look at, that's the total drag at the company level.
Vivek Anand:
So previous quarter, looking specifically at ICE portfolio, EBITDA margins were stable
sequentially at 15.6%, right. So it's around 220bps.
Arvind Sharma:
Got it. Sir, coming -- going further in this segment. Yes, it's great to know that your gross margin
positive, but some of the peers are actually turning almost EBITDA margin positive. Can you
derive some synergies from your association?
Harshavardhan Chitale:
So you're right. I think there is some journey for us to walk on becoming EBITDA positive. But
we also started a bit later in terms of expansion of portfolio on VIDA. And hence, we are still in
the phase of completing our portfolio, investing in brand as well as our product portfolio. And
hence, our expenditures, there are far higher. And also then there is a scale effect once the
volumes go to a level some of your fixed cost in tooling, etc., start coming down. So I think we
still are some path ahead -- somewhere ahead there to go to EBITDA positive.
Coming to synergies with associated companies, the first obvious one was on the charging
infrastructure. We have now over 6,000 of them nationally. We have started monetizing it, by
the way. It's not only a differentiation, but now charging is also getting monetized with some of
the associate companies like Euler, which is a complete complementary portfolio, we are also
synergizing in go-to-market. So there are synergies like that. With respect to Ather right now on
the product front, we have not explored because as we had explained last time, market is still in
a rapid expansion mode and we don't want any of the brands and our R&D teams to get
constrained in expanding the portfolio and expanding share. Maybe sometime in future when
the market reaches a higher level of growth and maturity, there could be additional synergy
levers that will get explored.
Moderator:
The next question comes from the line of Raghunandhan from Nuvama Research.
Raghunandhan:
Greetings and also welcoming Nitin Vaid. To Harsh sir and Kausalya, it is good to see EV market
share at 14% in October, considering that EV seems to be the future, how do you see the mediumterm journey towards increasing market share towards company's blended share of 27% in EVs?
Can you indicate that medium-term efforts in terms of new products across use cases, across
scooters, motorcycle, maybe innovation efforts such as battery as a service, software,
competitive pricing, all your thoughts, please share?
Harshavardhan Chitale:
Yes. I mean we do aim to continue to expand our EV market share to also emerging as a leader
in EV. I mean there is -- we are quite open and bold about that. And you actually describe some
of the levers that we will utilize to get there, some of the specifics Kausalya, you may want to
add?
Kausalya Nandakumar:
Raghunandhan, apologies, I've kind of lost my voice, but hope I'm audible. First of all, seasons
greetings to everyone on the call. I think, Raghu, you are more or less touched on all our growth
levers, in fact in our investor deck on our website as well, we've talked a little bit about how we
are expanding both our revenue share as well as path to profitability. In terms of market share,
it has been a supply-driven economy right now.
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Hero MotoCorp Limited
October 29, 2026
We are very delighted that we have almost doubled our capacity in just a matter of first half of
the year, like Harsh mentioned in the earlier statement, we're also looking to further enhance
capacity towards the last quarter of this year. So we are extremely bullish. We are, of course,
pressing on every lever in terms of investment, in terms of focus on brand building and in terms
of portfolio expansion - in this half of the year itself, we've launched 2 very good variants, both
of whom have found phenomenal product market fit. One at the top end of series, which was the
4.4 kilowatt and one at the midrange mainstream segment, which was the 3.1 kilowatt. So we
are committed to continue to listen to consumers and customers take feedback and expand the
portfolio to meet their demand, and we continue to invest in capacity in order to meet our
ambition in this space.
Raghunandhan:
Can you indicate that, even Harsh sir spoke about how that new 4-kilowatt is getting a very good
response. Can you indicate broadly how would be the mix between 2-kilowatt, 3-kilowatt, 4kilowatt - how that premiumization is panning out and how customers are thinking?
Kausalya Nandakumar:
So Raghu, we are actually -- this is a new variant introduction. And therefore, one is in terms of
customer traction, we are seeing a lot of inquiries for the top end. However, we also see that
there is a good distribution of inquiries across ranges. So consumers are looking for products
that more or less fits their daily range requirement right from something like 75 kilometers per
day, which is what our 2.2 variant offers, all the way to close to about 140 kilometers, which is
top end. We are seeing a good traction. It's very early days to actually comment on the stable
blend, but we are seeing almost the premium range now pulling close to 40% of the overall
portfolio for VIDA.
Harshavardhan Chitale:
And maybe to build on what Kausalya said, I think 1 thing that we should call out and it's there
in our investor deck out of website, we are right now selling or retailing VIDA through around
700 retail outlets and more regularly with enough supplies available to maybe 450.
And when you put it in the context that we have close to 8,500 points of sale, so there is a lot
more retail expansion that's also going to come to further drive the growth. I mean this is one of
our biggest strengths. The large go-to-market in the entire nook and corner of the country. Now
as we start scaling up our capacity in Vida, you will see more and more of these outlets also
getting opened up.
Raghunandhan:
Very helpful. To Vivek, sir, if you can touch upon in Q3, you said there is a small commodity
cost inflation, approximately how much can be the inflation impact? And what has been the
cumulative price hike so far? And any more calibrated price hikes you are planning going
forward?
Vivek Anand:
So in Q2, we had a material price inflation of, as I said, around 1%. And a large part of it, we
had covered it through cost saving programs and calibrated price increase. Yes, so that was 1
that -- sorry, if you can just repeat your second question.
Raghunandhan:
So I'm just asking approximately how much can be the cost inflation in Q3? What has been the
cumulative price hike so far? And any plans of further price hikes, sir?
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Vivek Anand:
Hero MotoCorp Limited
October 29, 2026
Okay. So in terms of price hike, our quarter 1 and quarter 2, as I said earlier, our inflation is
around 5.5%. We've taken half of it as a price increase. And in terms of quarter 3, as you know,
commodity continues to be volatile. We expect a marginal uptick in input cost.
However, we counter those headwinds through continued cost rationalization, accelerated LEAP
savings, aggressive improvements in improving VIDA unit economics and targeted pricing
actions. Backed by these measures, we expect the margins to be broadly stable.
Harshavardhan Chitale:
And we did take a price hike in -- on 1st of October as well.
Vivek Anand:
We took a one price increase in October, Yes. That's right.
Raghunandhan:
How much was it, sir?
Vivek Anand:
It was almost around INR1,000 per unit.
Moderator:
The next question comes from the line of Yash Agarwal from Nirmal Bang.
Yash Agarwal:
My first question is for Anuj, sir, on the Hero's premium segment. Despite the recent product
launches and increased focus on premiumization, the segment hasn't really gained the expected
traction yet. So what are the key factors holding back the growth? And what specific steps are
we taking to accelerate the adoption, strengthening our position in that segment against
competitors?
Anuj Dua:
Thank you, Yash. You're right, absolutely. So far, markets and the results have not been great,
but that also tells how big the headroom for us is to grow. I think the levers I must share with
you - the recent 2 launches, which Harsh touched upon which is Xtreme 160 and Xtreme 250,
excellent feedback from the media rides and also initial uptick of the inquiry levels at the
dealerships. So that definitely is very encouraging.
Xpulse has proven to be an excellent volume for us. Now it was more in South. Now the other
zones of the country also have started showing huge interest in Xpulse, which is going to be
another very strong brand for us in the premium segment. The Premia network, which we started
opening around 2 years back, so we have reached around 150 stores now, and there is going to
be a rapid expansion across other cities, in all major cities where the premium segment business
is big. So that is going to be a major focus, for sure.
The whole focus on this expansion will also be kind of supported by a fact that the community
building efforts across all these Premia dealerships will start from December onwards in a very
structured manner. All this put together, these levers, we are very confident we'll be growing
premium segment business quite a lot. And as I said, there is a huge headroom for us to grow.
Yash Agarwal:
My second question is on the EV segment. Like we have seen scooter penetration in EVs going
close to 23%, 24%. So what is the current EV penetration level in electric motorcycle at industry
level? And how does Hero assess the segment's adoption potential going forward?
Kausalya Nandakumar:
As you know, that the product market fit in e-motorcycles is being established. The penetration
is, of course, very low single digits. This is, again, in terms of the value proposition that you
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Hero MotoCorp Limited
October 29, 2026
need to bring to consumers who are otherwise inclined to buying motorcycles. And therefore,
this segment continues to be underpenetrated with respect to electrification, and we are seeing
more buoyancy on the scooter space, like you mentioned, it is close to 22% to 23% penetration
of EVs in the scooter part of the portfolio.
Yash Agarwal:
And then what is our launch pipeline motorcycle launch in the next 1 or 2 years? Any update on
that?
Kausalya Nandakumar:
We'll, of course, love to give you more information, maybe closer to the date, but we will keep
you informed. As of now, we continue to take in customer information and requirements and
build our product portfolio basis that and we will keep you informed closer to date as we get to
that point.
Yash Agarwal:
Just 1 last question on flex-fuel motorcycle segment. So what has been the initial response to it?
And how much contribution do you expect from-flex fuel segment going forward in the midterm?
Harshavardhan Chitale:
No, I think great question. From the date we launched or started shipping it being a little over 2
months, and we have done close to 15,000 dispatches of flex-fuel vehicles. So right now, it's
more of a controlled launch because you don't have E85 availability across the country. So we've
started it in select dealerships. But we do see that even in areas where there is no E85 and in the
normal fuel availability E20, customers are going ahead and buying flex-fuel vehicle because
it's future proof and gives consumer flexibility to use different fuel blends as and when they are
available.
Moderator:
Ladies and gentlemen, we will take this as the last question for today. I now hand over to Mr.
Harshavardhan Chitale for closing comments. Over to you, sir.
Harshavardhan Chitale:
So thank you, thank you for joining us today. Again, wish you all best wishes for Diwali, you
and your loved ones, and look forward to, again, talking to you next quarter. Thank you.
Moderator:
Thank you. On behalf of Hero MotoCorp Limited and PhillipCapital India Private Limited, that
concludes this conference. Thank you for joining us, and you may now disconnect your lines.
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