Hero Motocorp — Q4 FY26 earnings call

Call held 6 May 2026

Management summary

Hero MotoCorp delivered its highest-ever financial performance in FY26, driven by strong growth in scooters, EVs, and global business. Q4 FY26 saw robust revenue and profit growth, with ICE EBITDA margins expanding. However, the company faces short-term margin pressure from commodity headwinds, which are not fully offset by recent price hikes, and continues to invest significantly in its EV portfolio and capacity expansion.

Highlights

  • FY26 marked highest ever topline and bottom line, maintaining leadership as world's largest 2-wheeler manufacturer for 25 consecutive years.

  • Q4 FY26 revenue reached ₹12,797 crores, a 29% YoY growth, with EBITDA at ₹1,856 crores (up 31% YoY) and PAT at ₹1,401 crores (up 30% YoY).

  • ICE business EBITDA margin expanded by 100 bps YoY to 17% in Q4 FY26, driven by pricing, LEAP savings, and operating leverage.

  • Strong growth in focus segments: scooters up 48% YoY, EV volumes expanded 2.5x YoY, global business grew 41% YoY, and Harley-Davidson range grew 26% YoY.

  • Generated strong cash flow from operations of ₹9,395 crores for FY26, an 80% YoY increase, and declared highest ever total dividend of ₹185 per share for FY26.

Concerns

  • Commodity headwinds, including metals, gas, and labor costs, began in March and are expected to have a transitionary impact on margins in the short term.

  • Price hikes of approximately 2% do not fully cover the high single-digit BOM cost increase, leading to a 100 bps gross margin drop in Q4 FY26.

  • The EV business is still in a build-out and investment phase, incurring losses, though EBITDA losses per unit are decreasing quarter-on-quarter.

  • Overall retail market share has seen a slight decline due to the business mix, despite gains in specific growth categories.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹12,797 Cr
    YoY +29%
  • EBITDA
    ₹1,856 Cr
    YoY +31%
  • PAT
    ₹1,401 Cr
    YoY +30%
  • ICE Business EBITDA Margin
    17%
  • Overall EBITDA Margin
    14.5%

FY26

  • Revenue
    ₹46,830 Cr
    YoY +15%
  • EBITDA
    ₹6,871 Cr
    YoY +17%
  • PAT
    ₹5,268 Cr
    YoY +14%
  • Cash Flow from Operations
    ₹9,395 Cr
    YoY +80%

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.

Segment breakdown

  • Scooters
    48% Volume Growth (Q4 FY26)
  • EV
    2.5× Volume Expansion (Q4 FY26)
  • Global Business
    41% Wholesale/Dispatch Growth (Q4 FY26)
  • Harley-Davidson Range
    26% Sales Growth (Q4 FY26)
  • Exports
    ₹3,500 Cr Revenue (FY26)4,02,000 units Units (FY26)

Capital allocation

high confidence
  • Capex ₹1,500 Cr
    • Capacity expansion in scooters (doubling Xoom, 50% increase Destini)
    • EV capacity expansion (doubling from last year, then further doubling)
    • Global parts center in South India ₹700 Cr
    we have committed over *1,500 crores of capex in FY '27. And this capex is going to expand our capacity in scooters, where for some of our models that are doing very well, we are doubling our capacity. In EV, in fact, in a matter of a month, we would double our capacity from where we started last year. And then further down the road in a few quarters, there will be further doubling of capacity as we are seeing great momentum for our VIDA brand. We are also making significant investment in building up a second parts center, which is going to help in further expansion of our parts and accessories business. So we've committed over 700 crores of investment in building out a global parts center in South of India.
  • Dividend ₹75/share (final) Payout ratio 70%
    The Board has declared final dividend of 75 per share, taking the total dividend in financial year '26 to 185, our highest ever dividend. With this, we maintained our consistent dividend payout of 70% plus.
  • M&A Euler Motors Joint venture · Closed · Consideration ₹[object Object] (cash)

    Investment in additional categories in EV

    Total investment of ₹210 crores, bringing shareholding to close to 37%.

    Yes. Maybe just to first clarify, we are not investing 200 crores quarterly. We closed the 210 crores investment as a follow-on investment to our earlier investment, but it's not a 200 crores quarterly investment. ... That takes our so we just invested 200-plus crores, and that takes our shareholding to close to 37%.
  • Liquidity Liquidity disclosed Strong cash flow from operations of ₹9,395 crores for FY26, an 80% YoY increase, driven by working capital improvements.
    Our focus on cash management resulted in strong cash flow from operations, which stood at *9,395 crores for the full year '26, an increase of 80% year-on-year, driven by working capital improvements.

Guidance & targets

Volume

  • Industry Volume Growth Volume · FY27 · High confidence High single-digit
    As Vivek mentioned, industry expects high single-digit volume growth in FY '27. And it's a combination of both growth in motorcycles as well as scooters. Having said that, we do expect scooters to grow a couple of points more than motorcycles. So high single digit with a little less motorcycle, more in scooters.

    — Harshavardhan Chitale

  • Hero MotoCorp Volume Growth Volume · FY27 · High confidence Outgrow industry
    And looking at our success of some of the new launches and the plans next year, we do plan to outgrow industry both in motorcycles as well as scooters.

    — Harshavardhan Chitale

  • First Half FY27 Growth Volume · First Half FY27 · High confidence Stronger
    I think we do have a benefit of base effect in the first half. And hence, we do expect the first half growth to be stronger.

    — Harshavardhan Chitale

Margin

  • EBITDA Margin Margin · Medium-term · High confidence 14% to 16%
    We remain committed to our medium-term margin guidance of 14% to 16%.

    — Vivek Anand

Capex

  • Total Capex Capex · FY27 · High confidence Over ₹1,500 crores
    we have committed over *1,500 crores of capex in FY '27.

    — Harshavardhan Chitale

Capacity

  • EV Capacity Expansion Capacity · Within a month (first doubling), few quarters (second doubling) · High confidence Double capacity from last year, then further doubling
    In EV, in fact, in a matter of a month, we would double our capacity from where we started last year. And then further down the road in a few quarters, there will be further doubling of capacity as we are seeing great momentum for our VIDA brand.

    — Harshavardhan Chitale

  • Xoom Scooter Capacity Capacity · Q1 FY27 · High confidence Doubling capacity
    We are in process of doubling our Xoom capacity. ... This quarter.

    — Harshavardhan Chitale

  • Destini Scooter Capacity Capacity · Already done · High confidence Increased by 50%
    So starting with ICE scooters, we increased our Destini capacity by 50% already.

    — Harshavardhan Chitale

PLI

  • PLI Coverage of Portfolio PLI · During the year (FY27) · High confidence Almost 90%
    And we have plans during the year to go to almost 90% of our coverage.

    — Vivek Anand

Dealer Inventory

  • Overall Dealer Inventory Dealer Inventory · Current · High confidence Around 5 weeks
    So in terms of the dealer inventory, it's around 5 weeks, I'll say.

    — Vivek Anand

  • EV Dealer Inventory Dealer Inventory · Current · High confidence Single-digit days
    Nationally, in single-digit days.

    — Harshavardhan Chitale

Market context

  • Global Parts Center Investment Investment · High confidence Over ₹700 crores
    So we've committed over 700 crores of investment in building out a global parts center in South of India.

    — Harshavardhan Chitale

What to watch in Q1 FY27

EV Capacity Doubling

Within a month (from May 6, 2026)
Current Approx. 15,000 units/month (last year's base)
Target Approx. 30,000 units/month (doubled capacity from last year)

Why it matters

Verifies the immediate capacity ramp-up to support the high-growth EV segment and meet increasing demand.

on EV, we have we are close to completing an expansion, which will effectively get us 50% more capacity than the last quarter. So within a month, we'll be at a 50% more capacity than last quarter. And then further down the road in a few quarters, there will be further doubling of capacity as we are seeing great momentum for our VIDA brand. ... So the EV will see another doubling by end of this year is what you're saying? That's right.

Risks & concerns

  • Commodity Headwinds and Macro Environment

    medium

    Developments in West Asia impacting commodity costs (metals, gas, labor) leading to transitionary margin impact.

    Management acknowledged

  • Incomplete Offset of BOM Cost Increase

    medium

    Price hikes of ~2% do not fully cover the high single-digit BOM cost increase, leading to margin pressure.

    Management acknowledged

  • EV Business Losses

    medium

    EV business is still in an investment and build-out phase, incurring losses, though per-unit losses are decreasing.

    Analyst acknowledged

  • Overall Retail Market Share Decline

    medium

    Overall retail market share has come down due to business mix, despite gains in specific growth segments.

    Analyst acknowledged

  • Draft EPR Notification

    medium

    Evolving regulatory stage, difficult to quantify impact, under industry discussion.

    Analyst not addressed

Q&A highlights

6 direct, 1 evasive
FY27 Volume Outlook and Key Growth Models Partial
As Vivek mentioned, industry expects high single-digit volume growth in FY '27. And it's a combination of both growth in motorcycles as well as scooters. Having said that, we do expect scooters to grow a couple of points more than motorcycles. So high single digit with a little less motorcycle, more in scooters. And looking at our success of some of the new launches and the plans next year, we do plan to outgrow industry both in motorcycles as well as scooters. ... I would not like to give out information ahead of our launches.

Management confirmed high single-digit industry growth for FY27, with Hero aiming to outgrow, but withheld specific model launch details for competitive reasons.

Asked by Binay Singh, Morgan Stanley

Commodity Headwinds and Margin Impact Direct
So we expect that there will be a transitionary impact on our margins in the short term. And as management, we are doing whatever it takes to really mitigate the impact of that, which includes taking calibrated price increases and also accelerating our cost saving programs, right. But in the medium term, we are committed to our margin guidance of maintaining 14% to 16%.

Management acknowledged short-term margin pressure from commodity headwinds, stating price hikes don't fully cover cost increases, but reiterated commitment to medium-term margin guidance.

Asked by Binay Singh, Morgan Stanley

EV Losses and PLI Benefits Direct
We are still in the phase of building out our EV portfolio. And we still have many new launches planned in the year and hence, significant R&D investments are happening there. ... I'm happy to share that we now have PLI for 3 products, right, which almost covers 60% of our portfolio, right. And we have plans during the year to go to almost 90% of our coverage. And almost it translates to 13% of revenue as the benefit.

Management clarified EV is still in an investment phase with R&D, but PLI benefits covering 60% of the portfolio (aiming for 90%) are expected to contribute 13% of revenue, aiding sustainability.

Asked by Binay Singh, Morgan Stanley

Price Hike vs. BOM Cost Increase Direct
So the price hike that we've taken is close to 2% varies by different model, but approximately, say, 2% of the sale price. Commodity and the labor cost and the fuel cost increase is far higher than that. It's in high single digits, and it's changing day by day. So the price hike as of now does not cover fully the BOM cost increase.

Management confirmed that the 2% price hike on revenue does not fully offset the high single-digit increase in BOM costs, indicating continued margin pressure.

Asked by Gunjan Prithyani, Bank of America

EV and Scooter Capacity Expansion Details Direct
So starting with ICE scooters, we increased our Destini capacity by 50% already. We are in process of doubling our Xoom capacity. ... And on EV, we have we are close to completing an expansion, which will effectively get us 50% more capacity than the last quarter. So within a month, we'll be at a 50% more capacity than last quarter. And then additional few quarters down the road, we are in process of further doubling capacity.

Specific details on capacity expansion were provided: Destini up 50%, Xoom doubling, and EV capacity doubling within a month, with further doubling planned.

Asked by Gunjan Prithyani, Bank of America

Overall Retail Market Share Trend Direct
I think it's a great question. And the way you put it, that while we gained share across categories because of the business mix of different categories, it appears that arithmetically, total retail share has come down. But as we continue to outgrow the market in these high-growth areas, whether it's EVs or scooters or premium or also in our exports in each of them. And as that share continues to grow in our business mix, I think it's a matter of time where we expect to see overall reversal and also gaining of total retail market share.

Management acknowledged the overall retail market share decline due to business mix but expressed confidence in a reversal as growth segments continue to outperform the market.

Asked by Amyn Pirani, JPMorgan

Q4 Commodity Cost Impact on Gross Margin Direct
So during quarter 4, the material cost inflation was 2,100 and the corresponding revenue increase during the quarter was 2,000, right? So clearly, you see an impact in gross margin when you compare on a percentage basis of 100 basis points because the margin impact could not be recovered in the last quarter. And that's almost contributing to 60% of the drop in gross margin.

Management quantified the Q4 commodity impact, stating ₹2,100 per unit inflation led to a 100 bps gross margin drop, contributing 60% to the overall decline.

Asked by Shridhar Kallani, Antique Stock Broking Limited

Draft EPR Notification Impact Evasive
So EPR, at this point in time, as you rightly said, it's still -- it's in evolving stage, right. So the industry is at this point in time working on in terms of how to really operationalize it, right. So and as you know, the pricing is still evolving. So I think it's early days at this point in time for the industry. Yes, it's difficult for us to really quantify any impact.

Management stated the EPR notification is in an evolving stage and its impact is difficult to quantify, indicating uncertainty for investors.

Asked by Raghunandhan, Nuvama Wealth Management

2 min read 6 chapters

Detailed narrative

Record Financial Performance in FY26

Hero MotoCorp achieved its highest-ever topline and bottom line in FY26, marking its 25th consecutive year as the world's largest 2-wheeler manufacturer. The company reported a full-year revenue of ₹46,830 crores, a 15% YoY increase, with EBITDA reaching ₹6,871 crores (up 17% YoY) and PAT at ₹5,268 crores (up 14% YoY). The strong performance was capped by a robust Q4 FY26, with revenue of ₹12,797 crores (up 29% YoY) and EBITDA of ₹1,856 crores (up 31% YoY).

Strategic Growth in Focus Segments

The company demonstrated significant growth in its strategic focus areas during Q4 FY26. Scooter volumes surged by 48% YoY, while EV scooter volumes expanded 2.5x YoY. The global business (wholesale/dispatches) also saw substantial growth of 41% YoY. Furthermore, the premium Harley-Davidson range grew by 26% YoY, with the new X440 T variant contributing an impressive 120% growth in the quarter, indicating successful penetration in higher-margin segments.

Margin Management Amidst Commodity Headwinds

Despite commodity headwinds emerging in March, Hero MotoCorp's ICE business EBITDA margin expanded by 100 basis points YoY to 17% in Q4 FY26, driven by pricing actions, LEAP savings, and operating leverage. However, the overall EBITDA margin improved by a more modest 30 basis points to 14.5% in Q4, after accounting for ₹220 crores in EV investments. Management noted that a 2% price hike did not fully cover the high single-digit BOM cost increase, resulting in a 100 bps gross margin drop in Q4.

Aggressive Capacity Expansion and Investments

Hero MotoCorp is committing over ₹1,500 crores in capex for FY27 to support future growth. This includes doubling capacity for popular scooter models like Xoom and increasing Destini capacity by 50%. The EV capacity is set to double from last year's levels within a month, with further doubling planned in subsequent quarters. Additionally, over ₹700 crores is being invested in a new global parts center in South India to bolster the parts and accessories business.

EV Business Development and PLI Support

The EV business remains in a build-out phase with ongoing R&D investments, though EBITDA losses per unit are showing a quarter-on-quarter decline. The company has secured PLI benefits for 3 products, covering 60% of its EV portfolio, with plans to expand this to almost 90% during FY27. These PLI benefits are expected to contribute 13% of revenue, playing a crucial role in the EV segment's journey towards self-sustainability.

Strategic Focus on Technology and Market Share

The company's strategy emphasizes continuous investment in low-emission powertrains (EV, flex fuels), connected vehicles, and digital technology, including leveraging Gen AI for customer conversion. While overall retail market share has seen a slight dip due to business mix, management expects a reversal as growth in EVs, scooters, premium, and exports continues to outpace the market. Dealer inventory levels are healthy, at around 5 weeks overall and single-digit days for EV scooters.

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