Hero Motocorp: Expansion Of Company’s Electric Vehicle Segment

“We have started recovering our market shares and expect this journey to continue backed by exciting launches lined up over next few quarters, especially in premium segment. This, coupled with our renewed focus on savings programme should also help in improving our margin profile going forward. We are excited about our EV programme, with Vida being established as premium and aspirational brand. We are planning to roll this out across multiple cities in FY 24. Our R&D teams are working on accelerated portfolio expansion as well, in the EV space.”
-Mr. Niranjan Gupta, Chief Financial Officer

Stock Data

Ticker	HEROMOTOCO
Exchange	NSE & BSE
Industry	Automobile

Share Price

Last 1 Month	-2.1%
Last 6 Months	-7.7%
Last 12 Months	+3.1%

Business Basics & Diverse Product Portfolio

Hero MotoCorp Limited is an Indian multinational motorcycle and scooter manufacturer based in New Delhi, India. The company’s manufacturing facilities are equipped with state-of-the-art technology and automation, enabling it to produce high-quality products and maintain its position as a market leader. Hero MotoCorp is also engaged in several other business segments, such as parts and accessories, financial services, and electric mobility solutions.

The company’s parts and accessories business provides a wide range of genuine spare parts and accessories, catering to the diverse needs of customers. Hero MotoCorp has a strong focus on innovation, sustainability, and customer satisfaction. The company has invested heavily in research and development, leading to the introduction of several innovative products and technologies, such as the i3S (idle stop-start system) technology, which helps in reducing fuel consumption and emissions.

Hero MotoCorp has a diverse product portfolio, catering to various segments such as commuter bikes, premium bikes, and scooters. The company’s commuter bikes, such as the Splendor and Passion, are designed to cater to the daily commuting needs of customers, offering superior fuel efficiency, durability, and affordability.

The company’s premium bikes, such as the Xtreme and Karizma, are designed for customers who demand more power, performance, and style from their motorcycles.

Hero MotoCorp’s scooter range includes models such as the Maestro and Pleasure, catering to the needs of urban customers looking for a convenient and comfortable mode of transportation.

The company also offers electric scooters, such as the Hero Electric Photon and Hero Electric Optima, catering to the growing demand for eco-friendly mobility solutions.

Q3 FY23 Financial Performance

Hero Motocorp Limited reported Revenue from Operations for Q3 FY23 of ₹8,118.33 Crore up from ₹8,013.08 Crore year on year, a growth of 1.3%. The Consolidated Net Profit of ₹723.17 Crore, up 5.2% from ₹687.41 Crore in the same quarter of the previous year. The Earnings per Share is ₹36.29 for this quarter.

Developments In Company’s Electric Vehicle Segment

In March 20221, Hero MotoCorp launched its first electric vehicle, making it the company’s first foray into the EV market. The company has high hopes for the electric vehicle market and is using its research and development facilities in Jaipur, Rajasthan, to create a range of original products.

Hero MotoCorp’s new mobility brand, VIDA, Powered by Hero, began shipping its electric scooter, the VIDA V1, to customers during the quarter. There are two versions of the highly customizable VIDA V1, VIDA V1 Plus and VIDA V1Pro. The company intends to roll this out across multiple cities in fiscal year 2024. It has currently been introduced in Delhi, Bengaluru, and Jaipur.

The company is attempting to gain a larger foothold in the market with this product and then plans to accelerate the portfolio in the following 18 to 24 months. In contrast to the margins of ICE vehicles, the industry gross margins for EVs are low or nearly negative. Additionally, ICE margins are much stronger, which aids the business in funding its investment in the EV venture.

Analysis Of India’s Two Wheeler Industry

India’s two-wheeler market has expanded quickly since the process of liberalization was announced in 1991. India is currently the second-largest two-wheeler producer in the world. Five general categories—Economy, Executive, High performance, Lifestyle, and Power Bike—can be used to categorize the two-wheeler market. The executive and economy categories, out of all those mentioned above, have cemented a stronghold on the market by accumulating a record number of sales in the past. The two-wheeler market value totaled ₹1321.8 billion in this year, continuing its long-standing dominance of the country.

The Indian two-wheeler unit is expected to reach 13.7 million units in 2021, which is equivalent to the 2013 sales volume, and to grow at a 5% CAGR over the next five years. The two-wheeler market in India is expanding for a variety of reasons, such as rising demand in urban and semi-urban areas, comparatively low ownership costs, and popularity as a substitute for four-wheelers and public transportation.

The two-wheeler industry in India is confronted with difficulties such as the rapid and continuous rise in customer preference to purchase Electric Two Wheeler, fuel prices, extreme inflation, and also the exorbitant interest rates. The safety of the people riding in the car is another major concern. In India, speeding, breaking traffic laws, and poor road infrastructure are to blame for about 44% of two-wheeler accidents.