HEROMOTOCONSEMay 19, 2025

Hero MotoCorp Limited

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Management on call

Ashutosh Varmachief Business Officer

India BUAnalyst:Mr. Vivek Kumar –ICICI Securities

Key numbers — 40 extracted

43%

segment, Xpulse 210 and Xtreme 250R, have seen very good responses. Global business has grown at 43%, 2x of the industry growth. Our strategy of focus in the top 10 markets is starting to work well.

ent, Xpulse 210 and Xtreme 250R, have seen very good responses. Global business has grown at 43%, 2x of the industry growth. Our strategy of focus in the top 10 markets is starting to work well. In

g to work well. In the EV business, we gained market share during the quarter and exited March at 7%. The EV business is on a sustained growth curve helped by investments behind the brand, brand bui

20%

d, brand building, pricing interventions and launch of the VIDA V2 scooter. In 30+ towns, we have 20%+ market share. And in 60+ towns, we have 10%+ market share. Lastly, I want to reiterate that my

10%

launch of the VIDA V2 scooter. In 30+ towns, we have 20%+ market share. And in 60+ towns, we have 10%+ market share. Lastly, I want to reiterate that my focus will be on implementing our strategy t

₹9,939 crore

ocused strategic execution. Firstly, for the quarter, the company recorded quarterly revenue of ₹9,939 crores, EBITDA of ₹1,416 crores and PAT of ₹1,081 crores. The Company reported quarterly revenue for Pa

₹1,416 crore

n. Firstly, for the quarter, the company recorded quarterly revenue of ₹9,939 crores, EBITDA of ₹1,416 crores and PAT of ₹1,081 crores. The Company reported quarterly revenue for Parts, Accessories and Merc

₹1,081 crore

rter, the company recorded quarterly revenue of ₹9,939 crores, EBITDA of ₹1,416 crores and PAT of ₹1,081 crores. The Company reported quarterly revenue for Parts, Accessories and Merchandise (PAM) business at

₹1,553 crore

. The Company reported quarterly revenue for Parts, Accessories and Merchandise (PAM) business at ₹1,553 crores, a year-on-year growth of 11%. The EBITDA margin during the quarter for ICE business stood at 16

11%

for Parts, Accessories and Merchandise (PAM) business at ₹1,553 crores, a year-on-year growth of 11%. The EBITDA margin during the quarter for ICE business stood at 16.1%, driven by mix improvemen

16.1%

res, a year-on-year growth of 11%. The EBITDA margin during the quarter for ICE business stood at 16.1%, driven by mix improvement, lower material costs and LEAP savings, while we continued to invest b

₹143 crore

s. During the Quarter, after taking into account the investment behind EV business, approximately ₹143 crores, the overall EBITDA margin stands at 14.2%. I'll now move to full year '25. We achieved the high

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Guidance — 20 items

Vikram Kasbekar

opening

“Overall, we expect the industry to grow in the mid- and high single digits in FY '26.”

Vikram Kasbekar

opening

“In my first call, I had talked about our medium- to long-range-term strategy; and my focus will be on execution.”

Vikram Kasbekar

opening

“Lastly, I want to reiterate that my focus will be on implementing our strategy to win and gain market share.”

Vivek Anand

opening

“And with the continuity of demand and recovery in the broader two-wheeler market for us, both rural and urban; ramp-up of 125cc portfolio; new product launches; and strong investment behind brand -- power brands, we expect to grow ahead of the industry.”

Vipul

“So Xtreme 125 has been a success, but it was more of a catching up with the competition, so how do you plan to capitalize on your strong base and gain market share in the 125cc segment over next 5 to 10 years?”

Vipul

“So how do you plan to address -- like we are seeing that change in leadership is also happening to the Company.”

Vikram Kasbekar

“And, going forward, we are using technology for our development of our products in the R&D and addressing all quality issues at 360 degrees, whether it's the quality of customer experience, quality of manufacturing and quality of design.”

Ashutosh Varma

“Hi Chandra, if I got the question right, you're wanting to know a little bit more on what our projection for the industry is and how is Hero thinking about these volumes.”

Ashutosh Varma

“Overall, this year, we expect the industry to grow in the region of around 6% to 7%, pretty much the same as last year.”

Ashutosh Varma

“I mean the inflation is lower, so we expect the industry to be better that way.”

Risks & concerns — 9 flagged

So -- because when I look at VAHAN, the Y-o-Y market share, there's been a decline since January to April.

— Pramod Kumar

And there was no real retail impact, but I'll let Ashu maybe speak to the retail impact of that shutdown.

— Ram Kuppuswamy

Yes, the nature of the products has changed a little bit because of certain stress that some of the financiers have seen, but I guess there is a lot of innovation that's coming in there in terms of different kinds of schemes that are available.

— Ashutosh Varma

You will see the impact of that in quarter 1.

— Vivek Anand

And do you see any risk due to rising EV and export mix?

— Amit Hiranandani

I think this is a very conscious investment the company has decided to really make, right, in the next, I'll say, couple of years, near to middle term, right, so I don't see a risk to that.

— Vivek Anand

Firstly, on the 100cc motorcycles, the industry volume and Hero volume have seen some decline in last 2 quarters.

— RaghuNandhan

— Ashutosh Varma

What we saw was a lot of customers at the bottom of the pyramid coming under a large affordability stress.

— Ashutosh Varma

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Q&A — 12 exchanges

Sir, my question is from the next 5 - 10 years perspective. Now looking at the future prospect of premiumisation, Hero still has close to 80% market share in the population of entry-level motorcycles. And inherently, Hero has been a strong customer base who will upgrade in the future -- who will upgrade in future. So Xtreme 125 has been a success, but it was more of a catching up with the competition, so how do you plan to capitalize on your strong base and gain market share in the 125cc segment over next 5 to 10 years? That would be my first question.

Ashutosh Varma

Can I take that? Yes, yes, please. Ashu, please take that. I: Hero Hi. Vipul, thank you for the question. We've had some very strong gains in the 125cc category this year. On a full year basis, we gained close to 250 basis points in terms of market share. Xtreme as a brand if you see, only on 125R, we sold close to 300,000 units. Overall, Xtreme portfolio, since it's been there, is touching close to 0.5 million units already. And the kind of response that we have received on the product also gives us a lot of confidence that this brand overall will become much stronger. The more recent launch

My first question is just on the comment you made earlier around mid- to high single-digit growth in the industry. I just want to clarify that that's volume growth for the industry. And just as a follow-up to that, if you're able to share what Hero's expectation is for FY '25 in terms of volume. And historically, I think, you've spoken about revenue. So, I just want to understand those in a little more detail?

Ashutosh Varma

Hi Chandra, if I got the question right, you're wanting to know a little bit more on what our projection for the industry is and how is Hero thinking about these volumes. That's right. That's right. Okay, thank you. Thank you for the question. Overall, this year, we expect the industry to grow in the region of around 6% to 7%, pretty much the same as last year. I mean we have a lot of tailwinds this year. We have a good monsoon prediction. We have a good marriage season after a long time. And the initial signs are already visible. We've seen some income tax relief that should put in more money

My first question is also on this inventory. So should we understand that 4 to 5 weeks or maybe 4 weeks is kind of a normalized level that we are looking at going forward? Some sense would be important. And secondly, you mentioned that you had done a lot of launches in 4Q. And while obviously the wholesales were corrected and retails are picking up gradually, any initial sense, if you could give, as to what is the response to maybe the Destini 125 or the premium motorcycle that you have launched and what kind of numbers you are expecting to ramp up over the next maybe few months?

Ashutosh Varma

Hi Amyn, thank you very much. Overall, from -- I mean, if you look at the performance the last month in terms of VAHAN registrations, we had crossed 5 lakhs. We are increasingly focusing on retails as the key metric for performance. A channel inventory of anywhere between four to six weeks is our -- is the normal level that we would want to operate in. I mean, depending upon the season, we might just take it up a little notch, but subsequently come back to the same levels that we want to operate on. As I said, we've launched some products in Quarter 4, met with some amazing response. You would

Yes. Thanks a lot for the opportunity. My first question is on your guidance on outperforming the industry. The reason why I'm asking this is we had the same optimism and sentiment last year. We probably claimed to have the best launch pipeline. And the retail growth for the industry was 8% and we grew our retails by 1%. So what gives you the confidence that, this year, with slightly lower industry growth and not-as-actionable launch pipeline as last year, how do we expect to kind of outperform the industry on retail growth? And linked to that, what would be the linkages of that on the margin

Ashutosh Varma

Sure, Pramod. Thank you. I'll let the margin question be answered by Vivek, but allow me to come back on the first part of your question. The confidence comes from the delivery that we've had in Quarter 4. If you look at the performance that we've had in Quarter 4: In the entry category, we gained 600 basis points in terms of market share. The confidence comes from the fact that we've -- over the year, we have recovered on 125cc strongly, gained 250 basis points there. The confidence comes from the fact that the new scooters that we have launched in the market have met with some amazing respon

Hi, good morning. Thanks for taking my question. First, I just wanted to get a sense on like the non-vehicle revenue part for this quarter. I mean like even adjusting for spares, like our ASP is sort of looking much higher on a sequential basis, so could you just highlight are there any other larger amount of non-vehicle revenue or other stuff which has sort of boosted the revenues for this quarter?

Vivek Anand

I think large part -- so there is a revenue per unit growth of almost 4% year-on-year. And that's largely driven by two-wheelers and parts business. Okay. So on a sequential basis like our ASP is up big time, so I'm just -- is that just a mix effect or are there some other drivers there? Yes, it's largely the mix effect. Yes, you're right. So we are -- we have increased our revenue per unit both year-on-year and on quarter-on-quarter; specific to your question, on quarter-on- I: Hero quarter, which has increased by 2,236. It's largely the two-wheelers contributing to two-third of it and the ba

Sir, can you let me know, what is the spares revenue for the quarter?

Vivek Anand

It's ₹1,553 crores, which has grown by 11% year-on-year. Sir, this has been growing quite well for last few years actually, so could you share some insights here? What is driving this growth? In fact, the growth has been well ahead of the volume growth that we are seeing? Hi Kapil, thank you very much for that question. I mean parts business growth is something that we have looked back with pride over the years. In fact, there is a lot of fundamental work that has gone into where we are today. I mean there is a lot of work that has happened in terms of scaling up the networks, so we are much m

Thanks for taking my questions. I had a few clarifications. On the ASP increase quarter-on- quarter, which you covered earlier, is there an element of OBD price hike that's captured there? And if you can sort of just quantify that?

Vivek Anand

OBD price increase, yes. We've taken almost 2%, which is almost the case in the industry. Gunjan, this is a similar price hike across the industry. Yes, but if your question is how much of that is baked into the Q4 numbers: The Q4 numbers have very little of it because this was phased out over the months and model on model. So very little impact in the Q4 ASP increase. Okay, got it. So the large part of ASP is essentially mix. Because when I look at the entry- executive etcetera mix, that's not changed materially. So is it within the models that the -- what we are selling is probably higher va

Okay, all right.

Management

See this margin improvement journey in coming 2 to 3 years. And do you see any risk due to rising EV and export mix?

Vivek Anand

So I don't see a risk. I think this is a very conscious investment the company has decided to really make, right, in the next, I'll say, couple of years, near to middle term, right, so I don't see a risk to that. I think what is important for us to really -- is to really scale up the business, scale up the business fast, grow it profitably, right, so we will continue to grow our business and reinvest in EV. I think that's the strategy. And therefore, our margins will continue to be in the range of 14% to 16%. Right. And your outlook for these urban, rural separately for this fiscal, please. So

Firstly, on the 100cc motorcycles, the industry volume and Hero volume have seen some decline in last 2 quarters. How do you see the volume expectations for this segment going forward? What are the drivers?

Ashutosh Varma

I mean, for the 100cc and the entry category, of course, there was for the last few years stress at the bottom of the pyramid, which is why this segment had probably seen a little more stress than some of the other segments. Quarter 4, I mean, we had seen an impact across categories, not only in these. I mean, if you look at the delta shift from how these segments were growing versus how Quarter 4 behaved, you saw a blip across categories, so we really can't single out the 100cc category just by itself. That said, I mean, we are a very dominant player in this category. In the 100cc, we operate

So sir, my question was on HF Deluxe, basically if we see the FY '19 volumes and compare it with FY '25. Sir, HF Deluxe has seen a major drop here, while your Splendor has been something which is sort of a flattish, or either it has grown. So what is it that the HF Deluxe demand has been so impacted? Are the customers moving to Splendor? Can you throw some color on it?

Ashutosh Varma

Thank you for the question. In fact, what you witnessed from FY '19 to FY '25, in the middle of that, was a huge disruption that happened in the industry. There was COVID, which impacted disposable incomes to a great extent; and also BS-VI transition that happened, which increased bike prices substantially across categories and across all industry players. What we saw was a lot of customers at the bottom of the pyramid coming under a large affordability stress. Used two-wheelers, for example, which used to be 1:1 of new two-wheeler sales, post COVID, immediately post COVID, actually rose to cl

So in the recent context of your supply chain realignment shutdown which you've taken, I wanted to understand. How do you see new plants' capacity versus the old plants? Because you have plants since inception, almost like 20+ years on. Is there a scope to shift the production and bring those operational efficiency; and think through beyond having that 14%-16% margin?

Ram Kuppuswamy

So okay. I think there were 2 parts to that question. I'll address each one. To start with, the -- as we mentioned, we did temporarily halt production in 4 factories for 3 days. We, as I said, are back at full strength in this month. And we don't see any issues going forward. With respect to the second half of your question, which is more around the new factories that we have, we are ramping them up quickly. Our factory -- the last factory that we started, which is in Tirupati district, which is where we produce our EVs today, is ramping up and ramping up very well. And we've already also anno

Speaking time

Vivek Anand

Ashutosh Varma

Moderator

Vikram Kasbekar

Gunjan

Umang Khurana

Sonal Gupta

Kapil Singh

Ram Kuppuswamy

Pramod Kumar

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Opening remarks

Vivek Kumar

Thank you, Manav. Good morning, everyone. On behalf of ICICI Securities, I would like to welcome everyone on Hero MotoCorp's Q4 and FY '25 Earnings Call. I would like to thank the management of Hero MotoCorp for giving us this opportunity to host the call. Now I would like to hand the call to Mr. Umang Khurana, Chief Risk Officer and Head, Investor Relations. Over to you, Umang. Thank you.

Umang Khurana

Thank you, Vivek. Thank you for hosting us. Hello, everyone. You may all have noticed that we have postponed our Investor Day. We believe it to be respectful and prudent. We shall come back to you on this. On the call for us today, we have Mr. Kasbekar - our Chief Executive Officer; our CFO - Vivek Anand; India Business Head - Ashutosh Varma. We will begin with the call - Mr. Kasbekar's comment on the call. And then Vivek will have his opening comments as well, after which we will open this for questions and answers. Mr. Kasbekar, could we begin with your comments, please?

Vikram Kasbekar

Thank you, Umang. Namaskar and welcome to everyone to the Hero MotoCorp's Earning Call. We hope you all are keeping safe. We salute our armed forces for protecting the nation and keeping us all safe. Now moving on to business. I am sure you must have seen our strong quarterly performance. We ended the full year FY '25 clocking our highest-ever top line and bottom line. I'm happy to report that we have retained our leadership as the world's largest manufacturer of motorcycles and scooters for 24 consecutive years. Let me start with the overall economy. While there is an ongoing global turmoil due to the border situation, trade tensions, on the domestic front, the economy has started on a positive note, driven by tapering inflation, lowering interest rates and income tax cuts and expectations of a better monsoon. With regards to two-wheeler industry riding on the wave of a positive economic momentum, two-wheeler demand is shaping up nicely, boosted particularly by a strong marriage seaso

Vivek Anand

Thank you, Vikramji. Good morning all, and thank you once again for joining the call today. I'm pleased to report strong financial performance of Hero Moto corporation for the Fourth Quarter financial year '25 and full year 2025 driven by disciplined fiscal management and focused strategic execution. Firstly, for the quarter, the company recorded quarterly revenue of ₹9,939 crores, EBITDA of ₹1,416 crores and PAT of ₹1,081 crores. The Company reported quarterly revenue for Parts, Accessories and Merchandise (PAM) business at ₹1,553 crores, a year-on-year growth of 11%. The EBITDA margin during the quarter for ICE business stood at 16.1%, driven by mix improvement, lower material costs and LEAP savings, while we continued to invest behind brand building and new business. During the Quarter, after taking into account the investment behind EV business, approximately ₹143 crores, the overall EBITDA margin stands at 14.2%. I'll now move to full year '25. We achieved the highest-ever revenue

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