Hero Motocorp — Q2 FY26 earnings call

Call held 19 Nov 2025

Management summary

Hero Motocorp delivered a robust Q2 FY26, achieving record revenue, EBITDA, and PAT, fueled by a strong festive season and significant market share gains across its ICE and EV segments. The company's VAHAN market share saw substantial expansion in October, and its EV business recorded its highest-ever quarterly market share. Management anticipates the 2-wheeler industry to grow 8-10% in H2 FY26, with Hero positioned to outperform the market.

Highlights

  • Q2 FY26 Revenue reached a record ₹12,126 crores, reflecting a strong 16% year-on-year growth.

  • Highest ever quarterly EBITDA of ₹1,823 crores, marking a 20% growth, driven by cost efficiencies and mix improvement.

  • ICE business EBITDA margin improved significantly to 17.7%, an increase of 121 basis points year-on-year.

  • VAHAN market share expanded by 3.7% year-on-year to 31.6% in October, indicating strong competitive performance.

  • EV business achieved its highest ever quarterly market share of 11.7%, up 6.8% year-on-year, led by Vida VX2.

Concerns

  • EV business is currently in a negative zone at a product contribution level, though management is focused on achieving neutrality.

  • Expectation of 1-2% commodity inflation in Q3 FY26, which could impact margins.

Key financials

2 periods

Q2 FY26

  • Revenue
    ₹12,126 Cr
    YoY +16%
  • EBITDA
    ₹1,823 Cr
    YoY +20%
  • PAT
    ₹1,393 Cr
    YoY +16%
  • ICE Business EBITDA Margin
    17.7%
    YoY +1.2%
  • Overall EBITDA Margin
    15%
    YoY +0.54%
  • Parts, Accessories & Merchandise Revenue
    ₹1,533 Cr
    YoY +5%

H1 FY26

  • Revenue
    ₹21,705 Cr
    YoY +5.3%
  • EBITDA
    ₹3,205 Cr
    YoY +7.7%
  • PAT
    ₹2,519 Cr
    YoY +8%
  • Operating Cash Generated
    ₹4,111 Cr

What they filed

Q1 FY27: revenue up 35.7%, net profit up 29.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue10,463 10,211 9,939 9,579 12,126 +16%12,328 +21%12,797 +29%12,999 +36%
EBITDA1,516 1,476 1,416 1,382 1,823 +20%1,810 +23%1,856 +31%1,727 +25%
Net profit1,204 1,203 1,081 1,126 1,393 +16%1,349 +12%1,401 +30%1,454 +29%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed Operating cash generated in first half is 4,111 crores. Post the festive period, we now have the lowest inventory and lowest receivables in the recent years.
    Our continued focus on cash management resulted in delivering strong cash from operations, strengthening our financial performance, operating cash generated in first half is 4,111 crores. During this year, festive season starting from ONAM i.e. from 23rd August '25 until yesterday, November 13, 2025, the growth in ICE VAHAN registration stood at 16.2%, ahead of industry growth of 14.7% over the comparable period in the previous year, leading with a 40 bps market share gain. This was supported by strong traction in the Entry, Deluxe and Scooter segments. Our market share gains have continued into November, supported by sustained post-festive demand and the strength of our refreshed product portfolio. This buoyancy was clearly visible in our operations. Post the festive period, we now have the lowest inventory and lowest receivables in the recent years.

Guidance & targets

Volume

  • 2-wheeler industry growth Volume · H2 FY26 · High confidence 8-10%
    Based on these encouraging trends, we expect the 2-wheeler industry to grow 8% to 10% in the second half of FY'26 with Hero poised to outperform the overall market and continue to gain market share.

    — Vivek Anand

Market Share

  • Company market share Market Share · H2 FY26 · High confidence outperform industry and continue to gain market share
    Based on these encouraging trends, we expect the 2-wheeler industry to grow 8% to 10% in the second half of FY'26 with Hero poised to outperform the overall market and continue to gain market share.

    — Vivek Anand

Margin

  • ICE business EBITDA margin Margin · Ongoing basis · High confidence 14-16%
    So therefore, the guidance what we've given, we will continue to really be within EBITDA margins of 14% to 16%, right. So there has not been any change in that guidance.

    — Vivek Anand

Profitability

  • EV business product contribution level Profitability · Start of next financial year · Medium confidence neutral
    our gross at a product contribution level, we are still in a negative zone. So that's something is the second priority we have in terms of really getting to a product contribution neutral level.

    — Vivek Anand

Commodity Costs

  • Commodity inflation Commodity Costs · Q3 FY26 · High confidence 1-2%
    quarter 3, broadly, the expectation is there will be some level of commodity inflation, but will be more range bound within 1% to 2%.

    — Vivek Anand

What to watch in Q3 FY26

EV business product contribution level

Start of next financial year
Current Negative zone
Target Product contribution neutral level

Why it matters

Indicates progress towards profitability for the nascent EV segment, crucial for overall company margins and investment thesis.

our gross at a product contribution level, we are still in a negative zone. So that's something is the second priority we have in terms of really getting to a product contribution neutral level.

Risks & concerns

  • EV business product contribution level

    medium

    The EV business is currently in a negative zone at a product contribution level, requiring focus on cost reduction and volume scaling to achieve neutrality.

    Management acknowledged

  • Commodity inflation

    low

    Expectation of 1-2% commodity inflation in Q3 FY26, which management believes will be range-bound and managed through internal programs.

    Management acknowledged

Q&A highlights

8 direct
Post-GST festive trend and segment-wise growth (rural/urban, entry/scooter) Direct
We've seen a very strong recovery in 100cc. There were a lot of fence sitters who joined the mobility space. So that has really helped the us to grow ahead of the industry in the festive. And we are seeing very strong traction around Splendor, even HF. So that has helped. Scooters have been also a very good story of growth.

Provides detailed insights into the impact of GST cuts on different segments and the recovery in entry-level 100cc and scooter markets, along with rural demand.

Asked by Gunjan Prithyani

Sustainability of festive demand and post-GST momentum Direct
I think if I really look at the long-term trend, right, and also what we've been able to achieve in the 85 days of the long festive period, I think we strongly believe that this trend is likely to stay.

Addresses investor concerns about whether the strong festive demand is temporary or sustainable, with management expressing confidence in its continuation due to GST cuts and other factors.

Asked by Amyn Pirani

Export growth and market share gains Direct
So clearly, our 80-20 strategy of focus on top 10 markets is really playing out very well for us. In the top 10 markets, we already have 12% market share. And in some of the markets, we are number one.

Highlights the success of Hero's focused strategy in international markets, detailing market share gains and strong performance in key geographies.

Asked by Amyn Pirani

Scooterization trend and EV contribution Direct
I think the good part that has happened in the scooter segment is today, there is sub segmentation and new products that are serving different needs of customers have evolved. So I mean, you today have a sporty segment, a large wheel cruising segment, a typical metal body lower 100cc commuter segment. So there are quite a lot that has emerged and everything is carving a niche out of itself, suits larger needs. And this is why we feel that overall, from a scooter category growth perspective, the momentum will sustain.

Explains the underlying drivers of sustained growth in the scooter segment, including product innovation and the positive impact of EVs on new customer acquisition.

Asked by Jay Kale

First-time buyer contribution and long-term penetration Direct
every time an intervention like this has happened, we've seen the growth momentum sustain for few years and which is why we think that this momentum is going to continue.

Provides management's perspective on the long-term impact of interventions like GST cuts on first-time buyers and overall market penetration, suggesting sustained growth.

Asked by Jay Kale

Market outlook for H2 FY26 and potential for outperformance Direct
So yes, Vivek said that 8% to 10% growth in the second half of the year, Pramod. Good to hear you again.

Confirms the industry growth guidance for H2 FY26 and reinforces Hero's expectation to outperform the market, setting clear forward expectations.

Asked by Pramod Kumar

ABS cost impact and technological intervention Direct
We are in talks with the government. And I think shortly, we should come to a very positive conclusion, which will be far more effective technological intervention.

Indicates ongoing discussions with the government regarding the cost implications of ABS and potential technological solutions, which could influence future product development and pricing.

Asked by Kapil Singh

EV business profitability and path to breakeven Direct
our gross at a product contribution level, we are still in a negative zone. So that's something is the second priority we have in terms of really getting to a product contribution neutral level.

Reveals the current profitability status of the EV segment and outlines the strategic focus on achieving product contribution neutrality through cost management and volume growth.

Asked by Kapil Singh

2 min read 6 chapters

Detailed narrative

Record Financial Performance in Q2 FY26

Hero MotoCorp achieved its highest ever quarterly revenue of ₹12,126 crores in Q2 FY26, representing a 16% year-on-year growth. This strong top-line performance translated into record profitability, with EBITDA reaching ₹1,823 crores (up 20% YoY) and PAT at ₹1,393 crores (up 16% YoY). The ICE business demonstrated significant margin expansion, with its EBITDA margin improving by 121 basis points year-on-year to 17.7%, contributing to an overall EBITDA margin of 15% for the quarter.

Robust Festive Season and Market Share Gains

The festive season proved highly successful for Hero MotoCorp, with nearly 1 million retails recorded on VAHAN by October 25. The company's VAHAN market share expanded by 3.7% year-on-year to 31.6% in October. ICE VAHAN registrations grew 16.2% from August 23 to November 13, outperforming the industry's 14.7% growth. Market share gains were broad-based, including a 3% increase in the Entry segment in Q2 and 5% in H1, driven by new product launches and emotional campaigns.

Strategic Growth in EV and Global Businesses

The EV business achieved its highest ever quarterly market share of 11.7%, an increase of 6.8% year-on-year, primarily due to the success of Vida VX2. Hero MotoCorp now holds over 20% market share in 48 towns and is a top 2 player in 56 towns for EVs. Concurrently, the global business demonstrated robust growth, with dispatches increasing by 77%, three times the industry growth, and expanding its presence to 52 countries, including new entries into Europe and the U.K.

Product Portfolio Expansion and Premiumization Drive

Hero MotoCorp introduced 12 new models and variants during the festive period, contributing significantly to its market performance. Key launches like the Glamour X and Xtreme 125R in the 125cc segment, and Destini 125/Xoom 125 in scooters, have driven sequential market share gains. The premium segment network has expanded to 100 stores, covering 50% of the upper premium market, and Xpulse retail sales grew by 31% during the festival, indicating successful premiumization efforts.

Outlook and Margin Management Strategy

Management projects the 2-wheeler industry to grow 8-10% in H2 FY26, with Hero MotoCorp expected to outperform the overall market and continue gaining market share. The company maintains its EBITDA margin guidance for the ICE business within the 14-16% range. While a 1-2% commodity inflation is anticipated in Q3 FY26, Hero plans to mitigate this through its LEAP program, cost efficiencies, and mix improvement, ensuring sustained profitability.

Leadership Transition and Sustainability Focus

A significant leadership development was announced with the appointment of Mr. Harshavardhan Chitale as the new Chief Executive Officer, effective January 2026. Mr. Chitale's extensive global and diversified expertise is expected to guide Hero MotoCorp's future trajectory. The company also improved its Dow Jones Sustainability Index score to 75 in FY25 from 69 in FY24, reflecting its leadership in sustainable business growth and commitment to ESG initiatives.

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