Summary
Hero MotoCorp Ltd. - Q3 FY26 Earnings Call Summary Friday, February 6, 2026, 11:00 AM IST
Event Participants
Executives 6 Ashutosh Varma, Harshavardhan Chitale, Kausalya Nandakumar, Umang Khurana, V.S. Kasbekar, Vivek Anand
Analysts 9 Amyn Pirani, Arvind Sharma, Chandramouli, Gunjan, Kapil Singh, Kumar Rakesh, Mukesh Saraf, Mumuksh Mandlesha, Raghunandhan
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Quarterly) | ₹12,328 crores | +21% YoY; Highest ever quarterly revenue recorded. |
| EBITDA | ₹1,810 crores | +23% YoY; Margin at 14.7% (inclusive of EV investments). |
| PAT (Normalized) | ₹1,489 crores | +20% YoY; Reported PAT was ₹1,349 crores after ₹119 cr exceptional labor code provision. |
| ICE EBITDA Margin | 17% | +100 bps YoY; Driven by pricing, LEAP savings, and operating leverage. |
| Average Selling Price | ₹74,000+ (implied) | +4.2% YoY and +1.3% QoQ; Driven by mix improvement and premiumization. |
| Parts & Accessories | ₹1,673 crores | +8% YoY; Highest quarterly revenue for the segment. |
| EV Investment | ₹208 crores | Lower than ₹252 crores in Q2; Showing improved unit economics for VIDA. |
| Operating Cash Flow | ₹7,045 crores | 9M FY26 figure; Reflects strong cash management and operational efficiency. |
Geographic & Segment Commentary
- Domestic India (ICE): Market share in the 100cc Deluxe segment (Splendor) reached 91%, the highest since FY18. The 125cc segment saw retail growth of 70% for Glamour X, while Xtreme 125R’s dual-channel variant accounted for 35% of its January 2026 volumes.
- Electric Vehicles (VIDA): Market share expanded to 10.8% in Q3, led by the VIDA VX2 series. Management reported a 20% share in 28 towns and introduced “Battery-as-a-Service” to improve affordability for sub-₹1 lakh price points.
- Global Business: Volumes grew 41% YoY with a 7.5% market share (up 100 bps). Colombia volumes grew over 200%, turning profitable with a $5 million PAT; premium products now contribute 40% of total global volumes.
Company-Specific & Strategic Commentary
- Growth Pillars: Management identified five key growth areas: Scooters, Premium Motorcycles, Global Markets, EV (VIDA), and Parts/Accessories. CEO Harshavardhan Chitale emphasized leveraging Hero’s massive “park size” (existing vehicle base) to drive profit-accretive parts revenue.
- Premiumization Strategy: Scaled “Premia” brand stores to 106 outlets, now covering 50% of India’s premium industry footprint to elevate customer experience.
- Supply Chain Resilience: Focus on augmenting capacity for high-demand models like Xtreme 125R and global platforms to resolve current supply bottlenecks.
- Pricing & Cost Management: Implemented a ₹300 per vehicle price hike in January 2026 to mitigate 40-50 bps of commodity headwind from aluminum and precious metals.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Industry Growth | Double-digit (Q4 FY26) | Driven by wedding season, rural recovery, and post-GST rate reduction tailwinds. |
| FY27 Growth | High single-digits | Expectation of moderation in the second half of FY27 due to a high base effect. |
| EV Capacity | Marked increase in FY27 | Planned expansion to meet resounding demand for the VX2 series and new variants. |
| ICE Margins | Stable/Improving | Operating leverage from volume growth and LEAP savings expected to offset commodity inflation. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Inflation | Aluminum and precious metals saw prices rise in Q3, impacting margins by 40-50 bps; further volatility remains a concern. |
| Geopolitical Tensions | Uncertainty in global trade policies and regional conflicts could disrupt the 50% growth momentum in exports. |
| Financing Risks | Associate Hero FinCorp reported losses, though management targets mid-70% secured lending and improved credit costs in FY27. |
| Supply Bottlenecks | Rapid demand for new platforms (Xtreme 125R) has led to localized inventory shortages that require capacity augmentation. |
Q&A Highlights
Demand Trends
- Question: How is the urban vs. rural split following the GST reduction? (Gunjan)
- Answer: Both are growing strongly. Urban has an edge due to tax benefits, but rural peaked during festives and is expected to stay strong through the wedding season (Ashutosh Varma).
EV Strategy
- Question: How is Hero competing against peers with sub-₹1 lakh EV products? (Chandramouli)
- Answer: Hero uses a combination of mass-market variants and “Battery-as-a-Service” to lower the entry barrier. Removable batteries are a key differentiator for customers without fixed parking (Kausalya Nandakumar).
Global Business
- Question: Which geographies are driving the 50% export growth? (Amyn Pirani)
- Answer: Bangladesh (leadership), Colombia (200% growth), and new entries in Mexico, Philippines, and Europe. Strategy focuses on “local-for-local” manufacturing to bypass tariff issues (Harshavardhan Chitale).
Inventory Levels
- Question: Where does channel stock stand after the holiday volatility? (Chandramouli)
- Answer: Significant reduction in channel inventory occurred this year as retail outpaced wholesale. Planning remains judicious heading into the high-demand marriage season (Ashutosh Varma).
Key Takeaway
Hero MotoCorp delivered a record-breaking Q3 FY26, achieving its highest-ever quarterly revenue of ₹12,328 crores, supported by a 21% volume growth. The company maintained its 25-year manufacturing leadership, notably reaching a 91% market share in the 100cc motorcycle segment. Strategically, Hero is pivoting toward underrepresented high-growth segments, with ICE scooter share rising to 7% and EV (VIDA) share reaching 10.8%. Its global business turned a corner, led by a profitable turnaround in Colombia and a 41% volume surge. While commodity headwinds impacted margins by 50 bps, management offset this via a ₹300 price hike and LEAP savings. Looking forward, the company expects double-digit industry growth in Q4 FY26 and high single-digit growth for FY27, underpinned by rural recovery and an expanded premium retail footprint, despite potential macro-volatility.
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