HEROMOTOCO

’s EV and Export Push Strengthens Outlook

(HMCL) reported its highest-ever quarterly revenue in Q3FY26, rising 20.7% YoY, supported by 15.9% volume growth and improved realisations. The company’s global business and parts/accessories division delivered record revenues, while cost efficiencies helped offset commodity inflation. With strong rural demand, rising exports, and expanding EV presence, Hero MotoCorp continues to consolidate its leadership across segments. Financial Performance • Revenue: +20.7% YoY, highest-ever quarterly level. • Volumes: +15.9% YoY, aided by festive and rural demand. • Realisations: +4.2% YoY. • Parts, accessories & merchandise: ₹16.7 billion, +8% YoY, record revenue. • EBITDA margin: Expanded 22 bps YoY; ICE margin up 100 bps to 17%. • EV investments weighed on profitability, partly offset by cost efficiencies. Demand Outlook • Rural markets: Hero retains >50% share, wedding season expected to sustain demand in Q4. • Industry outlook: Double-digit growth guided for Q4FY26; FY27 growth expected at high single digits due to base effect. • Hero expects to outperform industry growth. Exports & Global Business • Export volumes: +41% YoY, market share up 100 bps to 7.5%. • Key markets: Bangladesh (leadership), Colombia, Latin America, Africa, Europe, Philippines. • Localised manufacturing footprint mitigated tariff changes in Mexico. Market Share Gains • Splendor: ~91% share in 100cc deluxe, highest since FY18. • Glamour & Xtreme 125R: Sustained gains in 125cc deluxe segment. • Scooters: Market share rose to ~7%. • VIDA EV: Market share 10.8% vs 4% YoY; >20% share in 28 towns, top-two EV player in 37 towns. Valuation & Outlook • Near-term risk: Commodity cost inflation may cap margin expansion. • Price hikes in January to mitigate cost pressures. • Valuation: 19.6x FY27E earnings, seen as reasonable. • Recommendation: Accumulate for long term, supported by strong demand, exports, and EV growth.