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Focus on growing core; building premium/EV

Upgrading retail network; investing INR10b-15b p.a to support its goals In HMCL’s Analyst Meet, the management, led by Mr Niranjan Gupta (the new CEO), highlighted its focus on changing gears by a) growing the core business, b) winning in the premium segment, and c) building leadership in EVs. It is upgrading its retail network to support its aspirations in the premium segment as well as in EVs. It is backing these aspirations with annual investments of INR10b-15b, largely directed toward the premium segment and EVs. The company maintained its EBITDA margin target of 14%-16%, supported by improving product mix, operating leverage, and cost-saving initiatives. Key highlights from the meet are:

Focus on growing core business

* The company is focused on expanding the categories in its core business of commuter segment (100cc motorcycle). This is primarily due to the limited potential for further growth in its already dominant market share of 80%.

* It sees scope for increasing the penetration by attracting the first-time buyers. The company aims to support the growth in this customer segment by offering retail financing options.

* In the 125cc motorcycle segment, the company is preparing to recover lost market share through product actions, particularly in the Premium 125cc segment.

* Its XTEC variants, which are feature rich, are doing well and are already 25% of the portfolio (Super Splendor XTEC has gained 3pp market share within three months of launch)

Increase scooter market share; expand exports reach

* In the scooter segment, the company has received a positive response for its new model, Xoom. The company is actively working on several new models in both the 100cc and 125cc scooter categories. It aims to increase its market share in the scooter segment in FY24.

* For exports, the company has identified 10 markets (including Nigeria, Columbia, Mexico, the Philippines, and SAARC countries) for focused expansion efforts. The company aims to allocate significant resources and efforts for scaling up its presence in these markets.

Win in Premium segment

* In the Premium motorcycle segment, the company has just 3% market share and it is focused on building product portfolio across sub-segments.

* The company has lined up a series of upcoming launches, which includes a collaboration with Harley Davidson (set to launch in the first week of Jul23).

* Further, it would elevate the buying experience by having over 100 exclusive stores for premium products in the next 12 months

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