Hero Motocorp

Hero MotoCorp reported strong financial results for Q3 FY25, with quarterly revenue reaching ₹10,211 crores, a 5% growth. EBITDA stood at ₹1,476 crores, an 8% increase, and PAT grew by 12% to ₹1,203 crores. The company achieved its highest-ever quarterly revenue from parts, accessories, and merchandise business at ₹1,555 crores, marking a 9% year-on-year growth. EBITDA per unit remarkably crossed ₹10,000, driven by premiumization, mix, and judicious pricing.

The company expanded its market share by 520 basis points quarter-on-quarter to 32.8% as per Vahan data, achieving its highest-ever retail in the quarter of over 2 million units. Market share gains were notable in motorcycles, especially in the Deluxe 125cc segment with Splendor and Xtreme 125R. Multiple new products were launched, including the Xtream 250R and Xpulse 210 in the premium segment, and the VIDA V2 Series (V2 and V2 Lite) in the EV segment.

Hero MotoCorp's EV strategy, branded VIDA, focuses on 'Accessible, Affordable and Aspirational' products. The company launched the VIDA V2 Series, upgrading the V1 platform, and the sub-₹1 lakh VIDA V2 Lite to enter the mass EV scooter segment. While Q3 saw lower EV dispatches due to the V1 to V2 transition, the company expects volumes to pick up as the channel is now full. The V2 portfolio is expected to become PLI compliant soon, with the entire EV portfolio achieving compliance in the next fiscal year.

Hero FinCorp's loan book grew by 13% year-on-year to ₹55,500 crores. However, the credit cost increased to approximately 6% due to lower collection efficiency, particularly in personal loan categories. Management indicated a focus on collections and expects profitability to improve going forward^⏳, with improving trends observed in December and January.

The company is on track for OBD-II Phase-B compliance, with manufacturing for the new norms starting from April 1st. This transition will lead to a marginal price increase of 1% to 2% across the industry due to additional hardware. Hero MotoCorp's products are already on the FI system, minimizing the impact compared to carburetor-based engines.

Rural demand saw a significant spike in Q3, increasing its contribution by almost 3% during the festive season. Management expects this momentum to continue into the next financial year, supported by government measures. The company does not perceive a structural shift in customer preference away from motorcycles towards scooters or EVs, viewing the current trends as a matter of execution and market expansion.

Hero MotoCorp is strengthening its premium portfolio and expanding its global business. The company's Premia stores have crossed 60 and are expected to reach 100 soon, boosting its presence in the premium segment. The global business has shown strong performance, growing at 40% in the first nine months, which is twice the industry growth rate, helping to reduce geographical concentration.

The call included an announcement of a leadership transition, with Mr. Vikram Kasbekar set to take over from Mr. Niranjan Gupta as CEO from May 1st. Mr. Kasbekar brings nearly 48 years of auto industry experience, including over two decades with Hero MotoCorp, covering operations, R&D, supply chain, and product planning. His focus will be on accelerating execution of the company's strategy to 'Grow the Core', 'Win in Premium', and 'Lead in EV'.