HEROMOTOCONSEQ3 FY'25February 12, 2025

Hero MotoCorp Limited

8,317words

127turns

11analyst exchanges

2executives

Management on call

Aditya Jhawar

Investec Capital Services (India) Private LimitedThe Management Team represented by:Mr. Niranjan GuptaChief Executive Of

Umang Khurana

Head of Investor Relations & Risk.

Key numbers — 40 extracted

95%

have once again displayed execution on our strategic priorities. In Q3, we gained market share in 95% of our portfolio with 125cc, EV and GB leading the pack. Our bottom-line profits were up 12% and

12%

e in 95% of our portfolio with 125cc, EV and GB leading the pack. Our bottom-line profits were up 12% and the YTD nine months recorded highest ever revenue and profits once again. Our EBITDA per unit

₹10,000

orded highest ever revenue and profits once again. Our EBITDA per unit remarkably has crossed now ₹10,000 per unit, driven by premiumization, mix and judicious pricing, which augurs well as we expand our

rs,

’, ‘Win in Premium’, ‘Build EV Leadership’ and ‘Diversify Revenue Streams’ and two operating pillars, ‘Future Fit Organization’ and ‘Lead ESG’ is in place now, powered by 4S mantra of Speed, Scale, Sy

₹10,211 crore

al results for Hero MotoCorp for the 3rd Quarter FY'25. The company recorded quarterly revenue of ₹10,211 crores, growth of 5%. This is the third consecutive quarter the company has recorded quarterly revenue

rp for the 3rd Quarter FY'25. The company recorded quarterly revenue of ₹10,211 crores, growth of 5%. This is the third consecutive quarter the company has recorded quarterly revenue of ₹10,000 cror

₹10,000 crore

growth of 5%. This is the third consecutive quarter the company has recorded quarterly revenue of ₹10,000 crores+. EBITDA stood at ₹1,476 crores, which is a growth of 8% and PAT at ₹1,203 crores, which is a gr

₹1,476 crore

onsecutive quarter the company has recorded quarterly revenue of ₹10,000 crores+. EBITDA stood at ₹1,476 crores, which is a growth of 8% and PAT at ₹1,203 crores, which is a growth of 12%. The Company also re

ecorded quarterly revenue of ₹10,000 crores+. EBITDA stood at ₹1,476 crores, which is a growth of 8% and PAT at ₹1,203 crores, which is a growth of 12%. The Company also reported its highest-ever qu

₹1,203 crore

rly revenue of ₹10,000 crores+. EBITDA stood at ₹1,476 crores, which is a growth of 8% and PAT at ₹1,203 crores, which is a growth of 12%. The Company also reported its highest-ever quarterly revenue from par

₹1,555 crore

o reported its highest-ever quarterly revenue from parts, accessories and merchandise business at ₹1,555 crores, year-on-year growth of 9%. Our continued focus on cash management resulted in delivering strong

revenue from parts, accessories and merchandise business at ₹1,555 crores, year-on-year growth of 9%. Our continued focus on cash management resulted in delivering strong Cash from Operations, stren

Advertisement

Guidance — 20 items

Niranjan Gupta

opening

“Finally, I would like to thank all of you who have given me your trust, support and confidence over the last eight years and 32 earning calls and Vikram now will be taking over from me from 1st of May and I am sure you will provide same support to him moving forward.”

Niranjan Gupta

opening

“Vikram Kasbekar the best to steer this role going forward with his leadership and vision.”

Vivek Anand

opening

“I am pleased to report strong financial results for Hero MotoCorp for the 3rd Quarter FY'25.”

Vivek Anand

opening

“Hero's differential scooter range led by popular Xoom 110 will get two additional scooters, Xoom 125 - which is a large 14-inch wheel base will be the fastest scooter in the category, a liquid cooled engine will drive the 160cc Xoom scooter.”

Vivek Anand

opening

“We are positive about the growth prospects of two-wheeler industry, and with the continuity of demand and recovery in the broader two-wheeler markets for us both rural and urban ramp up of 125cc portfolio, new product launches and strong investment behind building power brands, we expect to grow ahead of the industry.”

Amyn Pirani

“So, how should we think about this going forward?”

Ashutosh Varma

“Yes, indeed, the category is not very big, but our goal is to price it competitively, and just because we offer so many features, the liquid cooled engine, 14-inch wheels, is the largest scooter in the category - we expect to grow the category substantially.”

Vivek Anand

“I think if I really talk about the budget, I think one of the things which the budget has done is to really provide tax relief to this middle segment of customers, which means that their disposable cash in hand will actually go up as we get into next year.”

Swadesh Srivastava

“And in the next fiscal, you'll see the whole portfolio coming into the PLI compliance.”

Ashutosh Varma

“As we move into Q4 and with the wedding season that's coming up and the festives that kind of kick in from March onwards, we expect that the industry will just keep on improving from here.”

Risks & concerns — 5 flagged

And what we believe is that, that's almost to the tune of anybody who's earning close to 10 - 12 lakhs will have a positive cash impact of around ₹40,000 to ₹50,000 which will possibly take care of the EMI, which today he or she is paying for the two- wheeler.

— Vivek Anand

So, there's a quarter-on-quarter decline of about 50 basis points despite the higher spare part revenue contribution this quarter sequentially.

— Kumar Rakesh

Is there a tectonic shift in terms of the customer preference in the rural urban market l: Hero or the semi-urban rural market, which is putting pressure on our growth because we are down on market share in a year when rural demand has done very, very well.

— Pramod Kumar

Because I am guessing a lot of them have also been talking about, you know, stress, not just in personal loan, but also, you know, on the two-wheeler loan book.

— Amyn Pirani

Or do you continue to see willingness to lend and availability of finance not being a challenge?

— Amyn Pirani

Advertisement

Q&A — 11 exchanges

Hi, thanks for the opportunity and also want to take the opportunity to wish Niranjan and the other senior management who are moving onto the different roles, all the best, and also to Mr. Kasbekar and the team who are taking on new role, all the best as well. Just on the quarter, two questions from my side. This quarter we have seen the parts revenues have a very strong growth and I think from a trend basis also it seems that the growth has been much stronger. So, is there a seasonality here because I think first half the growth was much weaker, 3rd Quarter we have seen an acceleration and th

Ranjivjit Singh

Good morning. This is Ranjivjit here. Hi, Amyn. I will address your question in a minute. Let me just, as this is going to be my last interaction in this forum with you all, I just wanted to firstly thank you all for the engagement, the interaction, and I've had the privilege to lead the India business for almost four years in this iconic company. And in this time, we have developed and worked on the House of Strategy, the first pillar being ‘Grow the Core’ and we strengthened our position in the 100cc and the 125cc motorcycles, our new launches in scooters will further solidify our position.

Hi. My question pertains to the recent changes in the budget with respect to income tax savings. How does that influence our customers and any sense on what would be income profile of our customers, what would be the median income of our customers as such?

Vivek Anand

So, if you really look at our entry segment, right, especially 100 and 110cc segment two-wheelers, I think that the income levels typically range between 6 - 12 lakhs per annum, right. I think if I really talk about the budget, I think one of the things which the budget has done is to really provide tax relief to this middle segment of customers, which means that their disposable cash in hand will actually go up as we get into next year. And what we believe is that, that's almost to the tune of anybody who's earning close to 10 - 12 lakhs will have a positive cash impact of around ₹40,000 to ₹

Hi, good morning sir. Thanks for the opportunity. Sir, a couple of follow-ups on the topics that were discussed. One, on the tax break, if you could give a breakdown of the profile of the consumers maybe for the industry or for Hero MotoCorp whatever you have in terms of the occupation, how much is the rural mix, how many are salaried customers and how many are business or SME kind of customers, whichever way you build the profile, is there anything available like that?

Vivek Anand

So, Kapil, first of all, thanks for the question. We will share that separately with you, yes. Okay. Second, I had a question on demand. We notice that till festive period, the demand for the industry was pretty buoyant, and in the last couple of months, things seem to be slow. So, just wanted your assessment of the demand conditions and also the financing conditions? Yes. Thanks, Kapil for the question. As we move into Q4 and with the wedding season that's coming up and the festives that kind of kick in from March onwards, we expect that the industry will just keep on improving from here. Yes

Hi, thanks for taking my question. I just wanted to continue on this EV business. You all made this announcement of transitioning the EMBU as a separate entity from Feb 1 onwards. So, just trying to understand the rationale here and does that mean that whatever we sell on EVs incrementally is going to be accounted outside of standalone? What does this restructuring mean? And I am also going back to a comment you made earlier that that we were going through a transition and hence investments in EVs are lower. Is it to do with this restructuring, if you can just clarify?

Swadesh Srivastava

Hi, thanks for the question, Gunjan. So, EMBU has been a separate BU over the last few years. We do see that our strategic pillar being ‘Build EV Leadership’ will require further acceleration and further focus and further innovation, and hence there is a concerted effort of bringing more synergy and bringing more focus and dedication on the EV innovation and product development. That's what it is going to be. And I will let Vivek answer on the reporting side, but just on the third part of your l: Hero question, we were going through the transition from V1 to V2 in the last one and a half month

Hi, good morning. Thank you for taking my question. My first question was a continuation on the Hero FinCorp performance. So, you reported a loss in this quarter, and you spoke about that the credit cost has also inched up. So, where the credit cost currently is sitting, it now more than 7% for you? And also how is the funding cost trending for you?

Vivek Anand

Broadly, I can tell you the credit cost is currently close to 6%, right. But more details if you want, we can certainly share offline with you. And funding costs for the business, how is that trending, is it still going up? Yes. So, that's what I said. We'll certainly be happy to engage separately and share the details with you. Got it. My second question was on your EV strategy - more a little from medium to longer term perspective. So, what is it that you're targeting with the EV business, are there any milestones that you are looking for that, say you want to be the top three EV companies o

Thank you sir, for the opportunity. And nice to see the new Hero website. Sir, firstly, can you help us understand plans to revive the HF Deluxe brand on the 100cc portfolio? And also, I have seen that l: Hero recently there has been changes made in the pricing. Just want to understand over medium term, what's the plan for to revive this brand, sir?

Ashutosh Varma

Hi, Ashutosh here. In this category, the entire 100cc, we are the market leaders. And hence, not only do we have to ensure our market share, but also we have a responsibility to grow the category, which is what we would be trying as a part of our strategy. We know that for this segment, affordability is the major anchor on which we need to work. So we work on a host of solutions, financing solutions. We also want to augment the value proposition of the current motorcycles that we have in this sector. We also are working to improve the penetration levels in the under-penetrated areas. And there

Yes, congrats team for a good set of numbers and reporting good EBITDA. Sir, my two question is if you can give some color on how the rural and urban grew in Quarter 3 and outlook for the same for next fiscal? Secondly, according to your evaluation, what product gaps have you identified? And additionally, do you have any intentions to enter into the electric three wheeler? l: Hero

Niranjan Gupta

I will let Ashutosh answer the first question on rural and urban and then we will take up the next one. Yes, hi, Amit. In Quarter 3, we did see a big spike in the rural demand. The contribution of rural went up almost by 3%, as we saw in the festive season. We expect the momentum to continue going forward in the next financial year as well. We know that there are a host of government measures that are coming in to improve the rural sentiment, and we expect to benefit from that. And of course, there will be spikes on occasions which we expect to continue. As far as the next question is concerne

Yes, thanks a lot for the opportunity. Before I go ahead with my questions, congratulations and wish Niranjan and Ranjivjit Singh all the best for the future endeavor. It was great interacting with you guys and look forward to hearing from you, and Niranjan particularly, soon. With that, I will just move on to the first question, sir. It's been pretty categorical that rural has done much better than urban for the last year or so across every category. But what surprises me is that despite that, motorcycle as a category is losing category share at the industry level. Scooters plus Moped is alre

Ranjivjit Singh

Yes, again, this is Ranjivjit here. Thanks for the question, Pramod. What we have seen over the festival and we have been sharing our thoughts with you in terms of how there has been a contraction in the overall 100cc segment led with Entry. And our job as the market leaders is to expand. And that's what Ashutosh also talked about, Grow the Category. Now, the unlock really is in terms of addressing, not only the symptom of affordability, but also getting the penetration up, getting people to understand the benefits of using the motorcycle and how it really helps them. So, our programs around r

Yes, hi. Thanks for the opportunity, and congratulations on good set of numbers. Sir, just one clarification on the OBD-II Phase 2 norms. You said that the price hike we will take because we are already on FI system would be 1 to 2%, right?

Vikram Kasbekar

Right. And what would it be for, let's say, someone who is still on carburetor engines? You said carburetor? Yes. No, all our products have already moved to FI, and therefore, Sakshat, the impact on us will be limited, as Mr. Kasbekar mentioned, to 1-2%. We don't have any carbs left, and therefore. One of our competitors would be still using carburetor. So, I wanted to… No, let me explain. For OBD-II Phase B, Carb will not work. That's for sure. I don't know if somebody is saying that. That's surprising. But yes, for exports and EV markets, some countries do require carb, which will continue m

Yes, hi. Thanks for the opportunity again. I just wanted to go back to the discussion around lending and to some extent Hero FinCorp. You mentioned that there were some steps on the personal loan book. But is personal loan a very large proportion of Hero FinCorp? And how much will be the auto book size for Hero FinCorp, if you can share that?

Niranjan Gupta

Amyn, given that it's an associate company, we will refrain from making detailed comments on their portfolio and the business as of now. But of course, offline, we can get a call scheduled with their team with you. So, just as a follow-up, in general, outside of Hero FinCorp, from third-party lenders, have you seen any pullback? Because I am guessing a lot of them have also been talking about, you know, stress, not just in personal loan, but also, you know, on the two-wheeler loan book. So, are you seeing some pullback from their side? Or do you continue to see willingness to lend and availabi

Yes. So, as you have seen, I will just recap a few of the highlights of the quarter before I sign off. And clearly, as you saw, consistently we are delivering now more than ₹10,000 crores of revenue quarterly. We have registered on a year-to-date basis almost 10% revenue growth. We have clocked 20% PAT growth on a year-to-date basis. Our quarterly double-digit PAT growth, again, highest- ever revenue and the profits that we are talking about. 95% of our portfolio has started recovering market share. Our retail shares, which is Vahan, are higher than our dispatch market shares. And when you loo

Ranjivjit Singh

I would like to thank everyone here. This is Ranjivjit here. It was absolutely fantastic to engage and interact with you. Great insights. I look forward to catching up in the future. But thank you so much for this. Thank you, everyone. We look forward to having an Investor Day. We will come back to you shortly, with all the leadership together to talk more about this as well. Have a wonderful day. Bye-bye for now. Thank you.

Speaking time

Niranjan Gupta

Vivek Anand

Moderator

Swadesh Srivastava

Kumar Rakesh

Sakshat

Umang Khurana

Vikram Kasbekar

Amyn Pirani

Jinesh Gandhi

Advertisement

Opening remarks

Aditya Jhawar

Yes, thank you, Steve. On behalf of Investec Capital, I would like to welcome everyone on Hero MotoCorp's Q3 FY25 Earnings Call. I would like to thank the Management of Hero MotoCorp for giving us this opportunity to host the call. I would like to hand the call to Mr. Umang Khurana – Head of Investor Relations & Risk. Umang, over to you. Thank you.

Umang Khurana

Thank you so much for hosting us, Aditya and Investec. Hello and good day everyone. Welcome to Post Q3 FY25 Results Investor Call. On the call with us today, we have Niranjan Gupta – CEO, Vivek Anand – CFO, Ranjivjit Singh – Chief Business Officer, India Business, Swadesh Srivastava – Chief Business Officer, Emerging Mobility Business Unit. As you know, there have been changes in the company leadership. Consequently, we will also introduce you to the new Management members. We will begin the call as usual, Business Update from Niranjan, followed by Financial Update by Vivek. Niranjan, over to you.

Niranjan Gupta

Thank you, Umang. Greetings and welcome, everyone to our Earnings Call. Our quarterly results, as you have seen, have once again displayed execution on our strategic priorities. In Q3, we gained market share in 95% of our portfolio with 125cc, EV and GB leading the pack. Our bottom-line profits were up 12% and the YTD nine months recorded highest ever revenue and profits once again. Our EBITDA per unit remarkably has crossed now ₹10,000 per unit, driven by premiumization, mix and judicious pricing, which augurs well as we expand our volume given the operating leverage it will generate. Our strategy for 2030 with four growth pillars – ‘Grow the Core’, ‘Win in Premium’, ‘Build EV Leadership’ and ‘Diversify Revenue Streams’ and two operating pillars, ‘Future Fit Organization’ and ‘Lead ESG’ is in place now, powered by 4S mantra of Speed, Scale, Synergy and Simplification. l: Hero Our reshaping of portfolio, which started a couple of years back, continues with four launches at Bharat Mobil

Vikram Kasbekar

Yes. Thanks Niranjan. I would like to thank the board and the chairman for this opportunity. As you know from Niranjan, our strategy is very well laid out and to ‘Grow the Core’, ‘Win in Premium’ and ‘Leadership in EV’. All strategies are as good as the execution and our focus now is going to be purely on execute and accelerate the execution strategy. Product launches in premium, scooters and EV will support our growth. Thank you Niranjan for your leadership.

Niranjan Gupta

Thank you, Vikram. With that, let me just ask Vivek for his opening remarks. Our CFO, Vivek, over to you.

Vivek Anand

Yes thank you, Niranjan. Good morning and thank you all for joining the call today and wish you all a very Happy New Year. I am pleased to report strong financial results for Hero MotoCorp for the 3rd Quarter FY'25. The company recorded quarterly revenue of ₹10,211 crores, growth of 5%. This is the third consecutive quarter the company has recorded quarterly revenue of ₹10,000 crores+. EBITDA stood at ₹1,476 crores, which is a growth of 8% and PAT at ₹1,203 crores, which is a growth of 12%. The Company also reported its highest-ever quarterly revenue from parts, accessories and merchandise business at ₹1,555 crores, year-on-year growth of 9%. Our continued focus on cash management resulted in delivering strong Cash from Operations, strengthening our financial performance. l: Hero The EBITDA margins during the quarter for ICE business stood at 16%, driven by mix improvement, lower material cost and LEAP savings, while we continue to invest behind brand building and new businesses. Durin

Advertisement

← All transcripts HEROMOTOCO stock page →

Hero MotoCorp Limited

Market Movers