Event Participants
Executives
5 Harshavardhan Chitale (CEO), Vivek Anand (CFO), Kaushalia Nankumar (CBO, Emerging Mobility), Anuj Dua (CBO, Premium), Ashutosh Verma (CBO, India Business Unit)
Analysts
9 Amyn Pirani (JP Morgan), Binay Singh (Morgan Stanley), Chandramouli Muthiah (Goldman Sachs), Gunjan Prithyani (BofA), Kapil Singh (Nomura), Mehir Vora (Accurate Securities), Pramod Amthe (Incred Capital), Raghunandhan (Nuvama), Sonal Gupta (HSBC)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹12,999 crores | Grew 36% YoY; 13% premium over 23% volume growth driven by mix (8% benefit) and price realization |
| Total Volume (Wholesale) | 23% YoY growth | Broad-based growth; ICE up 21%, EV up 151% YoY |
| EBITDA | ₹1,727 crores | Margin 13.3%, down 120 bps QoQ despite 300 bps gross margin contraction; aided by 14% sequential cut in other expenses |
| PAT | ₹1,454 crores | Consolidated PAT ₹1,418 crores vs. normalized ~₹1,100 crores last year (excl. one-time ₹700 crores associate dilution gain) |
| Gross Margin | -300 bps QoQ | Pressured by ~4.5% net commodity inflation (oil, gas, freight, FX, steel, aluminum, precious metals) |
| ICE EBITDA Margin | 15.9% | Down 90 bps QoQ; cushioned by operating leverage, cost savings, higher PAM profitability |
| EV Volume | 57,000 units | Up 26% QoQ; retailing >20,000 units/month consistently |
| EV Revenue | Growing; total P&L investment flat at ~₹230 crores QoQ | |
| EV EBITDA Loss per Unit | ~₹40,000 | Improved from ~₹50,000 in prior quarter; some models now gross margin positive |
| PLI Benefit | ₹48 crores | 60% of EV portfolio PLI-certified; expect 100% by December 2026 |
| Parts & Accessories (PAM) Growth | +30% YoY | Mix of volume and price; ~25%+ trend continuing in July |
| Wholesale Market Share | +30 bps | Gained across all focus segments |
| ICE Scooter Market Share | ~7% | +230 bps share gain in one quarter; scooter volumes nearly doubled YoY |
| EV Market Share | +400 bps in a year | Delhi market share jumped to 16.7% (#2 position, from #4) |
| Global Business Market Share | +110 bps in quarter | Export volumes grew >63% YoY |
| 100cc Motorcycle Market Share | ~86% | +230 bps share gain; category also growing, outgrew industry |
| Blended Price Increase (ICE) | ~4.5% | Cumulative since end-February across models; EV price increases in early double digits |
Geographic & Segment Commentary
India – ICE Motorcycles: 100cc category growing, Hero outgrew industry gaining 230 bps to ~86% share. Price increases (4.5% blended) partly offset by tactical price cuts on entry-level HF Deluxe in select geographies to expand first-time buyer market — initial demand response very strong. Category finance penetration improved to ~65% retail penetration in July.
India – Scooters: Fastest-growing internal segment; dispatches nearly doubled YoY. Gained 230 bps market share to ~7% in ICE scooters. Capacity being doubled for Destini and +50% for Xoom; channel inventory for Xoom running at ~half normal levels, indicating demand outstripping supply.
EV (Vida): Volumes of 57,000 in Q1 (+26% QoQ), 151% YoY wholesale growth. Two new variants launched — VX2 Plus (4.4 kWh, 187 km IDC range, "Hafte Mein Bas Ek Baar" campaign) and VX2 Go (3.1 kWh, 120 km range). Introduced in Nepal. P&L investment flat at ₹230 crores despite higher volumes. Per-unit EBITDA loss improved from ~₹50,000 to ~₹40,000.
Premium Business: New CBO Anuj Dua appointed, prioritising retail experience, portfolio expansion (XPulse 421, XMR 250 expected), merchandise/accessories, Harley-Davidson partnership deepening, motorsports (Dakar) and adventure segment focus. Products launching from festive season through next 12 months.
Global Business: Volumes grew 63% YoY (stronger than overall ICE 21%). Opened Germany for ICE vehicles; Vida launched in Nepal in July. Committed to sustained 40%+ YoY export growth trajectory. Contributed ~25 bps to EBITDA via FX realization.
Parts & Accessories (PAM): 30% YoY revenue growth driven by expanded reach, SKU coverage, new lines of business, gray market conversion, and accessory attach (EV, premium). New GPC 2.0 facility capex of ₹750 crores to more than double parts capacity.
Company-Specific & Strategic Commentary
Capacity Expansion: EV capacity tripled in FY27 — from 15,000/month to ~30,000/month (on stream August 1), targeting 45,000/month by Q4 FY27. Added 2,000/day Splendor capacity (completed), 1,500/day scooter capacity (Destini doubled, Xoom +50%). Combined scooter+EV capacity up ~2,500/day with 2/3rd already commissioned.
Flex Fuel Leadership: Industry-first flex fuel variants in core commuter segment (Splendor, HF) launched June; designed to run on 20-85% ethanol blends. Started dispatches in July; ~5,000 units sold within two weeks of launch in select outlets. Management highlights differentiated positioning as only player in segment.
EV Product & Profitability Roadmap: Four-pillar strategy for self-sustainability — PLI (₹48 crores in Q1, 100% coverage by Dec-26), scale (capacity ramp), BOM cost reduction (Leap savings program), calibrated pricing. New non-product revenue streams: battery-as-a-service, Vida Edge connected services subscription, extended warranty. EV motorcycle platforms unveiled at EICMA 2025 — Project Ubex (urban naked bike) and VxZ (Zero Motorcycles collaboration, high-performance adventure); launch expected next year (not FY27).
Premium Business Transformation: New CBO Anuj Dua (ex-Royal Enfield, 20+ years experience) leading premium unit. Priorities: premium retail experience, portfolio expansion (new models next 12 months), merchandise/accessories (mass customization trend), Harley-Davidson partnership enhancement, motorsports accessibility (Dakar platform) and community engagement.
Technology & People: New CTO Sachin Agarwal joined May with multi-powertrain expertise. Continued investment in new powertrains (flex fuel, electric motorcycle range, clean mobility) alongside EV and premium capacity builds.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | Medium-term target 14-16%, not short-term | Commodity inflation transitory; focus on absolute EBITDA growth in FY27; Q2 input cost inflation expected marginal uptick to be fully neutralized via mix, discretionary spend optimization, cost savings |
| Industry Volume Growth | ~High-single to double-digit for FY27 | Q1 industry grew 14% YoY (ICE +11%, EV +67%); July strong; H2 base effect will lower YoY growth but momentum suggests positive growth; EV industry grew 80%+ in July |
| EV Capacity | 30,000/month current → 45,000/month by Q4 FY27 | First phase on stream Aug 1; second phase (balance 1/3rd) commissioned in final quarter of FY27 |
| PLI Coverage | 100% of EV portfolio by December 2026 | Currently 60%; FY27 first full year of PLI accruals — structural tailwind for EV profitability |
| Price Increases | ~4.5% blended ICE since end-Feb; EV early double-digit | Marginal additional ICE price increase taken in July; tactical price cuts in select entry-level variants to boost market expansion |
| Export Growth | Target 40%+ YoY trajectory | Continued market entry (Germany, Nepal) and product expansion; volumes grew >63% in Q1 |
| PAM Growth | ~25%+ in FY27 | Trend continuing in July; capacity expansion (GPC 2.0, ₹750 crores capex) supports |
| EV Profitability | Positive by end of FY27 (company trajectory) | Per-unit EBITDA loss improved ~20% QoQ to ~₹40,000; scale, BOM reduction, PLI, non-product revenue as levers |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Cost Inflation | West Asia conflict triggered inflation across oil/gas, freight, FX, steel, aluminum, precious metals. Gross margin contracted 300 bps QoQ in Q1. Q2 expects marginal uptick; management confident of neutralization via mix, cost savings, pricing. Escalation beyond current levels could pressure margins further. |
| Electrification Policy Impact | Proposed Delhi EV policy (FY28) could accelerate EV adoption. Hero has prepared with capacity, dealer activation, charging infrastructure, and upcoming motorcycle platforms. However, EV profitability remains pressured with per-unit losses of ~₹40,000, and competitive intensity could limit pricing power. |
| H2 Base Effect on Growth | Strong post-GST sales surge in H2 FY26 creates high base. Management expects lower yet positive YoY growth in H2 FY27. A demand slowdown in commuter segment is a key watch point for market share maintenance. |
| Vahan Market Share Decline | Q1 FY27 Vahan retail market share dropped ~150 bps YoY per analyst observation. Management cites wholesale share +30 bps and retail momentum; market share trajectory in festive season will be critical. |
| EV Competition & Profitability | EV industry growing rapidly (67% in Q1, 80%+ in July); Hero's share +400 bps YoY to ~16.7% in Delhi. Sustained scale-up and cost discipline needed to reach profitability; management targeting positive unit economics by end-FY27. |
Q&A Highlights
EV Capacity & Demand Visibility
- Question: On EV/scooter capacity expansion and new model launches — any sense of order books, inventory levels? (Amyn Pirani, JP Morgan)
- Answer: Vida has minimal channel inventory (2-3 days regionally), indicating pent-up demand; ICE scooters like Xoom running at ~half normal channel stock. 10,000 additional EV capacity already on stream this month. Added ~2,500/day combined scooter+EV capacity. (Harshavardhan Chitale)
Capacity Expansion Timelines
- Question: Is understanding correct that capacity ~65,000/month currently will double by H2? Timeline? (Gunjan Prithyani, BofA)
- Answer: 65,000/month accurate; capacity addition little more than doubles. 2/3rd already done; balance 1/3rd (second phase of Vida expansion) in Q4 FY27. Demand visibility solid due to low channel stock across models. (Harshavardhan Chitale)
Pricing & Entry Segment Demand
- Question: Back-to-back price hikes in Q4 and Q1 — customer acceptance? Impact on entry segment after GST tailwind? (Gunjan Prithyani, BofA)
- Answer: 100cc category growing; Hero share up ~230 bps to ~86%. Category expansion driven by retail finance interventions and affordability measures. Price increases taken with brand confidence; July retail finance penetration jumped to ~65%. Channel stock at ~6 weeks, below festive readiness levels — built up in coming months. (Unidentified speaker, likely Ashutosh Verma)
HF Deluxe Price Cut Rationale
- Question: Context on HF Deluxe pricing revision — where does pricing sit on affordability, impact on demand, festive outlook? (Pramod Amthe, Incred Capital)
- Answer: Tactical price cut on one entry-level variant (HF Deluxe) in select geographies for first-time buyers; immediate boost in showroom traffic and Splendor portfolio growth. Confident of category expansion. This segment protected from electrification risk near-term due to price differential, use cases, different markets. (Harshavardhan Chitale; unidentified speaker)
Export Outlook
- Question: Export opportunity vs peers, EV capacity fast-track possibility? (Pramod Amthe, Incred Capital)
- Answer: Exports grew >60% in Q1 with huge headroom. Opened Germany (ICE), Nepal (Vida); more markets and products coming. Target 40%+ YoY growth trajectory. Volume expansion plans factor in exports. FX contributed ~25 bps to EBITDA. (Harshavardhan Chitale)
EV Motorcycles & Delhi Policy
- Question: Proposed EV policy in Delhi — industry negotiations, importance of electric motorcycles? (Chandramouli Muthiah, Goldman Sachs)
- Answer: EV momentum in Delhi strong — inquiries and retail nearly doubled month-on-month; market share jumped from #4 to #2 at 16.7%. Supplies increased, all dealerships activated, charging infrastructure built. Motorcycle range will be available well before policy takes effect, complementing full EV scooter portfolio. (Harshavardhan Chitale; Kaushalia Nankumar)
EV Profitability & PLI
- Question: EV revenue %, EBITDA margin path to breakeven, PLI implications? (Chandramouli Muthiah, Goldman Sachs)
- Answer: EV revenue
₹660 crores (5% of total ₹12,999 crores); PLI benefit ₹48 crores covering 60% portfolio, 100% by Dec-26. Four-pillar strategy: PLI, scale (operating leverage), BOM cost reduction, calibrated pricing. Some models gross margin positive. Per-unit EBITDA loss improved from ~₹50,000 to ~₹40,000 QoQ. New revenue streams: battery-as-a-service, Vida Edge connected services, extended warranty. (Vivek Anand; Kaushalia Nankumar; Harshavardhan Chitale)
Premium Motorcycle Launches
- Question: Upcoming premium models — XPulse 421, XMR 250 expectations? (Raghunandhan, Nuvama)
- Answer: Multiple models in pipeline over next 12 months. Some launches from festive season; larger full-body-change models in subsequent quarters. Not XPulse 421 or XMR 250 before festive — few other premium models will launch pre-festive. XPulse brand strong globally. (Anuj Dua; Harshavardhan Chitale)
PAM Growth Sustainability
- Question: PAM revenue grew 30% YoY — gray market share gain, 20%+ FY27 growth possible? (Raghunandhan, Nuvama)
- Answer: Strong growth ~25%+ continuing in July. Drivers: expanded reach, operational efficiency, larger SKU coverage, new parts groups, new lines of business. Gray market conversion plus accessories growth with EV and premium range. New GPC 2.0 capex ₹750 crores to more than double parts capacity. (Unidentified speaker; Harshavardhan Chitale)
Commodity Cost & Price Hikes
- Question: Q2 commodity impact estimate (~50 bps?), additional price hikes needed? Also, blended price increase quantum? (Raghunandhan, Nuvama; Sonal Gupta, HSBC)
- Answer: Marginal input cost uptick in Q2 fully expected to be neutralized via mix, discretionary spend optimization, cost savings. Cumulative blended ICE price increase ~4.5% since end-February across models; marginal additional ICE hike in July. EV price increases in early double digits (includes added functionality). Focus remains on volume growth with calibrated pricing — tactical reductions on entry-level variants in select geographies. (Vivek Anand; Harshavardhan Chitale)
Vahan Market Share Concern
- Question: Q1 Vahan market share dropped ~150 bps YoY — at what point does price calibration stop to focus on growth? (Sonal Gupta, HSBC)
- Answer: Focus remains on growth (23% volume growth in Q1). Price increases calibrated — not all commodity cost passed on; more in some areas, less in others, and even reductions in entry variants for market expansion (HF Deluxe in some states) — immediate volume jump seen. Balancing margin protection with market momentum. (Harshavardhan Chitale)
Key Takeaway
Hero MotoCorp delivered a strong Q1 FY27 with 23% volume growth and 36% revenue growth to ₹12,999 crores, driven by premiumization mix (8% benefit), EV scale-up (151% YoY to 57,000 units), scooter share gains (+230 bps to ~7%), and 63% export growth. EBITDA margin contracted 120 bps QoQ to 13.3% due to commodity inflation (gross margin -300 bps), partially offset by disciplined cost management, with ICE EBITDA at 15.9%. Strategic focus remains on capacity expansion — EV capacity tripling to 45,000 units/month by Q4 FY27, scooter capacity +2,500 units/day, new premium models launching through FY27-28, flex fuel leadership in commuter segment, and EV profitability path via PLI (100% coverage by Dec-26), scale, BOM reduction, and non-product revenue streams. Management guided to medium-term EBITDA margin of 14-16%, not achievable short-term due to transitory cost pressures, with focus on absolute EBITDA growth. Industry growth expected to approach double digits for FY27 despite H2 base effects. Key watch points: commodity cost trajectory, festive season demand validation for aggressive capacity additions, EV competitive intensity, and sustaining Vahan retail market share trends.