Company Update : Hero Motocorp Ltd by Motilal Oswal Financial Services Ltd
Earnings in-line with estimates
* Net revenues grew ~16% YoY (in-line with estimates) to INR121.3b.
* Net realizations grew 4.2% YoY/ 2.4% QoQ to INR72k (above estimate of 70k). Volumes were up 11.3% YoY and 23.7% QoQ primarily due to festive season and GST rate rationalization.
* Gross margins remained flat YoY at 33.3% (ahead of estimated 32.8%).
* EBITDA grew 20.3% YoY to INR18.2b, broadly in-line with our estimates. EBITDA margins were also up 50bps YoY to 15% (in line) on account of better operational efficiencies and growing revenues.
* However, lower-than expected other income of INR2.3b led to Adj. PAT coming in slightly below our estimates at INR13.9b (v/s estimate of INR14.4b).
From the PR
* Hero Motocorp reported volumes grew 11% YoY in Q2 FY26 to 169.1k units (vs 152k units in Q2 FY25). H1 FY26 volumes were 305.8k units, which were steady YoY.
* Festive season performance (Aug–Nov 2025) was strong, with 16.2% growth in ICE VAHAN registrations, outpacing industry growth of 14.7% and leading to a 40bps market share gain. Growth was driven by entry, deluxe, and scooter segments.
* VIDA EV business achieved record performance, attaining an 11.7% market share led by VIDA VX2. The brand introduced a removable battery and Battery-as-a-Service (BaaS) model and unveiled the VIDA NOVUS portfolio and VIDA DIRT.E off-road electric series at EICMA 2025 in Milan.
* Global Business outpaced industry, with dispatch growth of 77% YoY— three times the industry growth—driven by Bangladesh, Nepal, Sri Lanka, and Colombia. Hero also marked its entry into Europe and the UK with Euro5+ compliant products.
* Product strategy strengthened the 100cc–125cc range with refreshed models such as HF Deluxe Pro, Glamour X, Destini 125, Destini 110, Xoom 160, and Xpulse 210. Market gains were led by HF Deluxe Pro, Passion, Splendor, and Glamour X.
* Board approved INR17b investment for Global Parts Center (GPC) 2.0 at Tirupati, Andhra Pradesh, to commence operations in FY 2027–28.
* Valuation: The stock trades at 21.7x/19.8x FY26E/FY27E EPS.
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