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Strong top-line growth driven by premiumisation and favourable mix:

HMCL’s revenue grew 21% YoY, supported by 10.5% volume growth, premiumisation and favourable product mix. EBITDA increased 8% YoY, while EBITDA margin stood at 13.4%, down 164 bps YoY, which was impacted by commodity headwinds, partially offset by cost savings and operating leverage. The 100cc segment grew 10% YoY, while Splendor volumes increased over 20%. The 125cc portfolio was up 19% in H1FY27, indicating improving traction. We expect product refreshes, premiumisation and market share gains to sustain domestic growth.

Scooters, EVs, exports and capacity expansion strengthen growth visibility:

ICE scooter dispatches grew 34% YoY in Q2FY27, with H1 growth exceeding 50%. VIDA retail volumes rose 74% YoY to 66k units, and the EV business achieved positive gross margin ahead of expectation. EV capacity doubled from 15k units/month at FY26-end to 30k units/month in September 2026, with 45k targeted by Q4FY27E. Export retail grew 19% YoY, despite wholesale disruptions in Colombia and Bangladesh. We expect capacity ramp-up, new launches and geographic diversification to drive growth, although export concentration remains a near-term monitorable.

Margin recovery hinges on cost control and EV economics:

Cumulative H1FY27 input cost inflation stood at ~5.5%, while the management expects Q3FY27E margin to remain broadly stable through cost savings, calibrated pricing and improving EV unit economics. FY27E capex remains at INR 15,000 Mn, including over INR 7,000 Mn for GPC 2.0, which will double parts-handling capacity. Parts revenue was up 27% YoY, supporting profitability. We expect operating leverage, cost optimisation and lower EV losses to support gradual margin recovery towards management’s 14–16% medium-term EBITDA margin target.

Q2FY27: Revenue in line; EBITDA slightly lower than our estimate

* Revenue was up 21.1% YoY and 13.0% QoQ to INR 1,46,874 Mn (vs CIE est. of INR 1,46,051 Mn) led by 10.5% YoY growth in volume and 9.6% YoY growth in ASP

* EBITDA was up 7.9% YoY and 14.0% QoQ to INR 19,676 Mn (vs CIE est. of INR 20,301 Mn). EBITDA margin was down 164 bps YoY and up 11 bps QoQ to 13.4% (vs CIE est. of 13.9%)

* APAT was up 4.6% YoY and flat QoQ to INR 14,562 Mn (vs CIE est. of INR 15,244 Mn)

View and Valuation:

We remain positive on HMCL, supported by scooter and EV growth, premium launches and market share gains. However, near-term profitability faces pressure from commodity inflation and growth investments. We largely maintain FY27E/FY28E EPS estimate, factoring in resilient volumes and stable margin guidance. We value the core business at 18x (maintained) FY28E/FY29E average EPS, while valuing Hero FinCorp and Ather at INR 51 and INR 734/share, respectively, after a 30% Holdco discount. Accordingly, we reiterate our ‘BUY’ rating with a maintained TP of INR 6,450.

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