Detailed Narrative
Q4 and FY25 Performance Overview
Hero MotoCorp reported a strong financial performance for Q4 and full year FY25, achieving its highest-ever top line and bottom line. For Q4 FY25, revenue stood at ₹9,939 crores, EBITDA at ₹1,416 crores, and PAT at ₹1,081 crores. For the full year FY25, revenue reached ₹40,756 crores (up 9% YoY), EBITDA ₹5,868 crores (up 12% YoY), and PAT ₹4,610 crores (up 16% YoY). The company maintained its leadership as the world's largest manufacturer of motorcycles and scooters for 24 consecutive years, selling 5.9 million vehicles in FY25.
Market Share and Product Strategy
The company demonstrated strong market share gains across key segments. In the 100cc category, Hero retained its leadership and gained 600 basis points in Q4. The 125cc segment saw significant recovery, gaining close to 250 basis points in FY25, driven by successful launches like the Xtreme 125R, which sold 300,000 units. New scooter launches, Xoom 125 and Destini 125 Xtec, were also positively received, contributing to market share increase.
EV Business and Strategic Investments
Hero MotoCorp's EV business showed significant growth, with volumes increasing by 200% in FY25. The EBITDA margin for the EV segment improved from -155% in FY24 to -95% in FY25. The company gained market share, reaching 7% by March 2025, with over 20% share in 30+ towns and 10%+ in 60+ towns. Strategically, Hero acquired a 34.1% stake in Euler Motors for ₹510 crores, marking its entry into the fast-growing EV three-wheeler category. Management expects the EV business to break even in a couple of years at a monthly volume of 25,000-30,000 units.
Global Business Performance
The global business segment delivered strong results, with dispatches growing 43% year-on-year in FY25, double the industry growth. This performance was broad-based, with growth across key markets including Bangladesh, Colombia, Nepal, and Mexico. The company exited FY25 with a 9% market share in global markets and aims to continue gaining market share in 2025-26.
Financial Management and Shareholder Returns
Disciplined fiscal management and cost savings, including LEAP savings and lower material costs, contributed to improved margins. The ICE EBITDA margin stood at 16.1% in Q4 and 16.2% for FY25, an improvement of 90 basis points. Overall EBITDA margin, after accounting for EV investments (approx. ₹630 crores in FY25), was 14.2% in Q4 and 14.4% for FY25, an improvement of 40 basis points. The company declared a total dividend of ₹165 per equity share for FY25 (₹65 final, ₹100 interim), representing an 8,250% payout.
Industry Outlook and Growth Drivers
Management projects the two-wheeler industry to grow in the mid- to high single digits (6-7%) in FY26, driven by positive economic momentum. Factors include tapering inflation, lower interest rates, income tax cuts, expectations of a better monsoon, and a strong marriage season in May and June. Hero MotoCorp is confident in outperforming industry growth and gaining market share, supported by its product launches and brand investments.
Production Halt and Inventory Management
Hero MotoCorp implemented a temporary production halt from April 17-19, 2025, at four facilities for supply chain realignment, scheduled maintenance, and infrastructure enhancements. While this impacted April dispatches, retail sales continued to grow. Channel inventory currently stands at 4-5 weeks, which management considers sufficiently covered for the upcoming festive season.
Quality and Customer Experience
Addressing analyst concerns about vehicle quality post-BS VI, management emphasized that product quality is paramount and a core strength of the brand. They stated that there has been no drop-off in quality levels and that technology is being utilized in R&D to address all quality aspects, from customer experience to manufacturing and design.