# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹9,579 Cr** Q1 FY'26 · **EBITDA:** **₹1,382 Cr** (4% margin) * **PAT:** **₹1,126 Cr** (stand-alone) · **₹1,706 Cr** (consolidated, incl. ₹722 Cr one-time gain) * **PAM Revenue:** **₹1,296 Cr** Q1 FY'26 ## B. Revenue & EBITDA * **ICE Profitability Strength:** Stand-alone EBITDA margin improved to 8% on favorable mix, pricing, and LEAP-driven cost savings. * **EV Investment Drag:** Consolidated EBITDA margin held at 4% despite lower revenue, with ₹189 Cr in EV investments offsetting ICE gains. ## C. Profit & Margins * **Gross Margin Resilience:** 100 bps YoY gross margin expansion achieved via pricing and product mix, despite adverse operating leverage. * **Cost Discipline Intact:** Operating expenses flat to slightly lower YoY, supported by structural cost controls amid planned production cuts. ## D. Cash Flow * **Operational Cash Strength:** Robust cash from operations sustained through disciplined working capital and cash management practices. --- # 2. Volume & Market Share ## A. Key Figures * Vahan Market Share: 30.9% in Q1 FY'26 (+100 bps sequentially) * **Entry-Level Segment Share:** **~67%** (800 bps YoY growth) * **EV Market Share:** **7%** in Q1, rising to **10%** in July * **Global Dispatch Growth:** **27%** YoY (+40% growth last year) * **Industry Growth (Q1):** **3%–5%** (vs. 6%–7% full-year forecast) ## B. Domestic Share Trends * **Broad-Based Gains:** Market share expanded across entry-level 100cc, scooters, and EVs despite a temporary April production pause now fully resolved. * **Scooter Momentum:** Sequential share improvement driven by Destini 125 and Xoom 125 launches, with supply ramp-up expected to sustain gains. * **Resilient Leadership:** Maintained strong position in Deluxe 100cc segment, contributing to overall share gains amid softer industry growth. ## C. EV Segment Growth * **Accelerating Traction:** EV share rose to **10%** in July, with **over 20% share in 27 towns** and top-2 ranking in **54 towns**, signaling localized dominance. ## D. Global Dispatches * **Outperformance in Key Markets:** Global dispatches grew 27% YoY—outpacing industry—on the back of new launches and retail strength in top 10 markets. * **Strategic Expansion:** Export growth target of **over 40%** maintained; long-term goal of **10% of total revenue** from global business underscores aggressive international ambition. --- # 3. Product & Segment Performance ## A. Key Figures * **HF Deluxe Market Share:** **11-quarter high** (+800 bps YoY) * **EV Market Share:** **7%** record quarterly share (+100% YoY) · **>10%** in July * **EV Sales Volume:** **>10,000 units** sold in July * **125cc Scooter Market Share:** **9.7%** peak in June ## B. Entry-Level Portfolio * **Entry Segment Reinvigoration:** HF Deluxe Pro launch drives **aspiration-led growth** with segment-first features, addressing both affordability and evolving consumer expectations for tech and design. * **Market Recovery Signs:** Entry-level segment shows improving health, with first-time buyers rising to **74% in Q1 FY'26** and positive response to innovation, signaling pent-up demand release. * **Clear Brand Differentiation:** HF and Splendor serve distinct segments—HF for entry-level mobility, Splendor for loyalists—enabling targeted share gains without internal cannibalization. ## C. 125cc Strategy * **Segmented Positioning Strength:** 125cc portfolio targets three distinct audiences—**Xtreme (performance)**, **Glamour (style)**, **Super Splendor (efficiency)**—with tailored value propositions driving competitive positioning. * **Market Share Gains Amid Headwinds:** Despite a shrinking sporty 125cc sub-segment (~43% of total), **Xtreme 125 is gaining share** through product enhancements and strong brand appeal. * **Expansion & Innovation Pipeline:** Augmentation of 125cc lineup in Q2 across all vectors, including a **new model with best-in-class tech and style**, aimed at capturing significant incremental share. ## D. EV Launches & BaaS * **BaaS as Growth Catalyst:** Launch of VIDA VX2 with **Battery-as-a-Service** model is accelerating EV adoption by lowering upfront costs and enabling usage-based ownership evaluation, driving record market share. * **Cross-Segment Customer Pull:** VX2’s differentiated offering is attracting **ICE scooter upgraders and bike customers**, expanding addressable market and improving sales mix. * **Rapid EV Scaling:** EV portfolio experiencing sharp volume ramp-up, supported by **PLI certification** and a clear roadmap including **new family-focused models** and **Harley-Davidson co-branded launches in Q2 and 2026**. --- # 4. Channel & Distribution ## A. Key Figures * **Premia Retail Network:** **124–125 outlets** (~47–48% premium footprint) · **90 stores by Q1 FY'26** * **VIDA Touch Points:** **600+ consumer touch points** across **400+ cities** * **Total Sales & Service Touch Points:** **6,000+ nationwide** ## B. Premia Network Expansion * **Premium Segment Penetration:** Premia network scaled as planned, now covering **nearly half** of the upper premium motorcycle market, with rising monthly throughput per store indicating strong execution. * **Broad Product Availability:** Xtreme 125 widely available across **~5,000 upgraded outlets**, extending reach beyond flagship channels. ## C. VIDA Distribution Strategy * **Dual-Channel Rollout:** VIDA leverages both Hero and Premia showrooms, enabling rapid market access while expanding its **dedicated network in over 400 cities**. --- # 5. Pricing & Demand Trends ## A. Key Figures * **ASP:** **+6%** YoY (favorable mix & pricing) · **₹1,900 decrease** QoQ (mix impact) * **Financing Penetration:** **65%** in July (recovery to prior-year levels) ## B. ASP Drivers * **Mixed ASP Performance:** Strong year-on-year ASP growth on favorable product mix and pricing, though recent quarter saw notable decline due to **PAM business mix impact**, not pricing changes. * **OBD II Rollout Timing:** Price hikes for OBD II compliance implemented gradually, with full impact split across Q4 and Q1, limiting near-term ASP uplift. * **Transparency Delayed:** Management deferred disclosure of detailed price hike impact over the past four quarters, citing forthcoming separate communication. ## C. Festive Demand Outlook * **Rebound Expected:** Despite H1 demand volatility from early monsoons and rural slowdown, management anticipates a strong festive season recovery, supported by **favorable macro conditions** and upcoming wedding season. * **Urban Momentum:** Recent growth led by urban markets, reversing earlier rural outperformance, driven by **early monsoon disruption in rural areas**. * **Broad-Based Aspirations:** Rising consumer demand across all segments—Entry to Premium—signals structural shift toward upgradation, supporting long-term volume and mix benefits. * **Macro Tailwinds, Lagging Tax Impact:** Despite multiyear low inflation, rate cuts, and tax reductions, demand response has been muted so far; confidence remains anchored in festive and wedding-driven cycles. ## D. Financing Penetration * **Seasonal Normalization:** Financing penetration rebounded to **65% in July**, reversing prior dip, with no change in lender behavior—Q1 weakness attributed to marriage-related cash purchases. * **Growth Levers:** Company leveraging its large customer base to drive financial innovations and accelerate replacement cycles, supporting future demand resilience. --- # 6. Supply & Commodity Risks ## A. Key Figures * Commodity Prices: +0.5% last quarter, expected range bound in Q2 * **Inventory Levels:** **~7 weeks** current cover, to increase ahead of festive season ## B. Rare Earth Availability * **Supply Normalization:** Rare earth supply conditions have normalized short-term, ensuring coverage for **Q2 FY'26** across ICE and EV operations despite ongoing industry-wide shortages. * **Component Vulnerability:** Shortages continue to impact critical components including **magnets for EV motors** and multiple sensors, affecting both powertrain types. * **Mitigation Strategy:** Active development of alternative solutions to circumvent structural supply chain constraints. ## C. ABS Regulation Impact * **Regulatory Shift:** MoRTH’s draft mandates ABS for ICE vehicles >50cc and EVs >4kW from **1 January 2026**, driving potential **5x demand surge**. * **Implementation Risk:** Industry-wide capacity constraints make full compliance by deadline **unlikely**, per company assessment. * **Cost & Scale Dynamics:** Near-term cost pressures expected, though Hero anticipates **material cost reduction** through volume scaling over time. --- # 7. Guidance & Outlook ## A. Key Figures * EBITDA Margin Guidance: 14%–16% range · 14%–16% range cited as sustainable benchmark ## B. Margin Expectations * **Near-Term Pressure:** Margins expected to operate at the **lower end of the 14–16% guidance range** in the short term, supported by volume recovery from festive demand and post-shutdown normalization. * **Cost Mitigation:** Commodity cost pressures anticipated to be offset by savings from the **LEAP cost-reduction program**. ## C. Growth Targets * **Outperformance Intent:** Company poised to **outpace industry growth** on the back of new product launches and brand-building investments amid broad-based demand recovery in rural and urban markets. * **Growth Acceleration:** Additional product and marketing initiatives planned for **Q2** to enhance competitiveness and drive share gains.