Hero Motocorp

Hero MotoCorp reported a Q1 FY26 revenue of ₹9,579 crores, with an EBITDA of ₹1,382 crores and PAT of ₹1,126 crores. The overall EBITDA margin stood at 14.4%, while the ICE business achieved a higher margin of 16.8% due to mix improvement, price adjustments, and LEAP savings. Consolidated PAT for the quarter was ₹1,706 crores, including a significant one-time^📎 gain of ₹722 crores from the dilution of investment in associate companies. The average selling price increased 6% year-on-year, though it saw a quarter-on-quarter decline of ₹1,900 due to mix impact from the PAM business.

The company's Vahan market share recovered to 30.9% in Q1 FY26, a sequential increase of 1%. Hero MotoCorp continues to gain market share in key segments, with HF Deluxe achieving an 11-quarter high and the 125cc scooter segment reaching 9.7% in June. New product launches, including the HF Deluxe Pro, new 125cc models, and refreshed sporty 125cc variants, are strategically aimed at disrupting the market and enhancing competitive edge. The entry segment market share is now around 67%.

Hero MotoCorp's EV business is gaining significant momentum, achieving a 7% market share in Q1 FY26, which further increased to over 10% in July. The company has expanded its EV presence to 27 towns with over 20% market share and holds a top 2 position in 54 towns. The launch of VIDA VX2, pioneering a Battery-as-a-Service model, is expected to reduce upfront ownership costs and attract new customers. The company has received PLI certification for VIDA V2 Pro and is working on approvals for other models, with a network of over 600 touch points across 400+ cities.

The global business segment reported a dispatch growth of 27% year-on-year, driven by focus on top 10 markets and new product launches. The company aims to grow global business by over 40% this year and target 10% of total revenue and volumes from this segment. The Premia channel, focusing on premium products like Xtreme 250 and Xpulse 210, is progressing well, with 90 stores by Q1 FY26, covering over 40% of the premium industry's footprint. This network has expanded to close to 125 outlets, with increasing throughput per store.

The economic landscape appears optimistic for the upcoming festive season, with multi-year low inflation and favorable monsoons expected to boost demand. The full-year industry growth forecast remains at 6-7%, despite Q1 retail industry growth being 3-3.5%. Financing penetration, which typically lowers in Q1 due to seasonality, has recovered to 65% in July, indicating no significant change in lending norms. Hero FinCorp's loan book grew 4% year-on-year to ₹54,735 crores, though its performance was impacted by high credit costs and NPA, reflecting an industry-wide trend.

The company addressed the evolving rare earth situation, stating it is covered in the short run for both ICE and EV production and is exploring alternatives. A significant regulatory development is the draft notification for mandatory ABS for ICE vehicles >50cc and EV >4kW from January 1, 2026. This regulation is expected to be expensive and require a five-fold increase in current capacity, with the industry engaging the government for alternative options and practical timelines, while remaining committed to rider safety.