Hero Motocorp Ltd., the world’s No. 1 two-wheeler manufacturer, in its Q3 earnings call highlighted strong growth in its parts business and introduced the Xoom 160 scooter. The management discussed the potential benefits of budget tax savings for their core INR6-12 lakh income customer base and their EV strategy with the VIDA V2 model launch, alongside commitments to PLI compliance. Financial challenges included Hero FinCorp’s issues with collection efficiency and rising credit costs. Discussions also covered revitalizing the HF Deluxe in the 100cc segment, updates on the Harley-Davidson partnership with export plans, and a 3% rural market growth. The company outlined its 2030 strategy aiming for significant revenue and PAT growth, a diversified portfolio, and leadership in ESG practices.
Hero Motocorp reported remarkable results with Q3 consolidated revenue reaching INR10,566 crore, up 5.3% and profit growing 1.5% to INR1,108 crore, surpassing analyst expectations, despite lower sales volume. The company’s growth in 2025 was driven by higher average selling prices, a premium product mix including the 125cc segment, and strategic expansion into EVs through the VIDA brand. While maintaining strong financial health with a 14.5% EBITDA margin and declaring a INR100 per share interim dividend, the company anticipates continued steady performance with 3-5% revenue growth, focusing on demand trends and new product launches.
Continue Reading: Discover the Vital Insights from Hero Motocorp Ltd.’s Earnings Call!
Financial/Operational Metrics:
- Total Revenue: INR10,566 crore, up 5.3% YoY.
- Net Profit: INR1,108 crore, up 1.5% YoY.
- Basic EPS: INR55.38, up 1.2% YoY.
- Total Volume Sold: 14.64 lakh units of motorcycles & scooters, up 0.2% YoY.
- Revenue from Parts & Accessories: INR1,555 crores, up 9% YoY.
Outlook:
- Industry Trends: Anticipating growth ahead of industry trends with rural and urban demand recovery.
- Investment: Continued investments in premium & EV portfolio, Hero 2.0, digital transformation, and brand building.
Analyst Crossfire:
- Parts Business Growth & Seasonality (Amyn Pirani – J.P. Morgan)? The strong growth in parts revenue was attributed to Q3 seasonality, with additional contributions from new business lines like tires, batteries, and oils. Expansion into rural markets and improved distribution also played a role. Profitability in the parts segment remains strong (Niranjan Gupta – CEO, Ranjivjit Singh – CBO).
- Impact of Budget on Customers & Gross Margin Improvement (Jinesh Gandhi – Ambit Capital)? The budget’s tax relief benefits middle-income consumers (₹6-12 lakh per annum), potentially increasing disposable income by ₹40,000-₹50,000 annually. This could support two-wheeler EMI payments and boost demand. A 90 bps reduction in raw material costs was mainly due to lower investments in the EV business, where dispatches were lower due to a model transition. Investments per unit remain unchanged (Vivek Anand – CFO).
- Demand Trends & Financing Conditions, Cost Optimization in EV Business (Kapil Singh – Nomura)? While festive demand was strong, it temporarily pulled forward sales from later months. However, upcoming wedding season demand is expected to sustain growth. The new VIDA V2 model offers improved cost structures. Hero MotoCorp remains focused on scaling the EV business while optimizing costs through localization and PLI benefits (Ashutosh Varma – Incoming CBO, Swadesh Srivastava – Head of EV).
- EV Business Restructuring, Harley-Davidson Partnership & Exports (Gunjan Prithyani – Bank of America, Mumuksh Mandlesha – Anand Rathi)? The EV Business Unit (EMBU) restructuring aims to enhance focus and innovation. However, there are no accounting changes, and EV operations remain within the standalone business. Hero plans to launch new motorcycles under the Harley-Davidson partnership, including a new platform. The X440 brand is expected to be available for both domestic and international markets (Swadesh Srivastava – Head of EV Business, Vivek Anand – CFO).
- Rural & Urban Demand Trends, Market Share & Category Shift (Amit Hiranandani – Phillip Capital, Pramod Kumar – UBS)? Rural demand spiked in Q3, with government measures expected to sustain momentum. Urban and premium portfolios remain strong, and the company continues to explore adjacent segments. Despite strong rural demand, motorcycle market share declined. Hero sees no structural shift toward scooters and EVs but is focusing on financing programs, rural penetration, and upcoming launches like the Xoom 125/160 to strengthen non-motorcycle categories (Ashutosh Varma & Niranjan Gupta – Hero MotoCorp).
- EV Sales & Production Ramp-Up, Industry Demand & Growth Outlook (Pramod Kumar – UBS, Sakshat – ICICI)? Post-Diwali EV sales decline was due to product transition. The supply chain has stabilized, and market share recovery is expected by March, supported by expanded town-level market penetration. Hero expects double-digit revenue growth for next year, driven by a strong start to Q4 and positive demand trends (Swadesh Srivastava & Niranjan Gupta – Hero MotoCorp).
