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Informist, Friday, Feb. 7, 2025

 

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--Hero MotoCorp: Oct-Dec EBITDA per unit crossed INR 10,000 per unit 
--CONTEXT: Comments by Hero MotoCorp mgmt in post-earnings analyst call 
--Hero MotoCorp: Pdt launches, premium electric 2-wheelers to support growth 
--Hero MotoCorp:EBITDA margin for fuel-run 2-wheelers 16%, driven by pdt mix 
--Hero MotoCorp: Oct-Dec electric 2-wheeler investment down 50 bps on qtr 
--Hero MotoCorp: Oct-Dec electric 2-wheeler invest INR 1.37 bln 
--Hero MotoCorp: Electric 2-wheelers to address new use cases in FY26 
--Hero MotoCorp: Credit costs of Hero FinCorp close to 6% currently 
--Hero MotoCorp: Saw big spike in rural demand in Dec qtr 
--Hero MotoCorp: Contribution from rural areas went up 3% in Dec qtr 
--Hero MotoCorp: Revenue to grow in double digits in FY25, FY26 

 

By Anand JC

 

MUMBAI – The demand for two-wheelers manufactured by Hero MotoCorp Ltd. saw a big spike in rural areas during the December quarter, with its contribution to overall sales increasing 3%, supported by the festival season, the company's management told analysts in a post-earnings conference call Friday. It expects the momentum to continue going forward in the next financial year as well, thanks to a host of government measures that may further improve rural sentiment, the company said.

 

Among measures recently announced in the Budget for 2025-26 (Apr-Mar) is the income tax exemption for individuals earning up to INR 1.2 million a year. The customers of Hero MotoCorp in the entry-level segment, especially the 100 and 110 cubic centimetre capacity, earn annually between INR 600,000 and INR 1.2 million. The company believes this move would increase disposable income in the hands of their customers by INR 40,000-INR 50,000. This could possibly take care of the equated monthly instalment payments by an individual for their two-wheelers.

 

Hero MotoCorp's market share in the domestic two-wheeler segment for the quarter ended December went up 520 basis points from the previous quarter to 32.8%. The company expects product launches in the premium scooters and electric vehicle segment to support its growth going forward. 

The company disclosed its December quarter financials on Thursday. Hero MotoCorp reported a net profit of INR 12.03 billion for the December quarter on revenues of INR 102.11 billion. Flat volume growth despite the festival season meant the on-year growth in Hero MotoCorp's net profit was the slowest in eight quarters in the December quarter.

 

Its earnings before interest, tax, depreciation, and amortisation, or EBITDA for the reporting quarter was INR 14.76 billion, 8% higher on year. During the conference call, Hero MotoCorp's management informed analysts that EBITDA per unit has crossed INR 10,000.

 

For 2024-25 (Apr-Mar), the company has guided for a double-digit revenue growth, and expects to report the same in the next financial year.

 

Hero MotoCorp's EBITDA margin for the December quarter was 14.5%. In the same period, its EBITDA margin from fuel-run two-wheelers was 16%, driven by improvement in product mix, lower material costs, and deep savings, the company said. 

 

The company's investment in the electric vehicle business Hero Vida was INR 1.37 billion during the quarter, 50 basis points higher than the base quarter, but 50 bps lower sequentially. This sequential decline was due to the company witnessing lower despatches in the reporting quarter. However, investment per unit remains unchanged, it said.

 

The V2 range of Hero MotoCorp's electric scooter portfolio will soon be compliant with the production-linked incentive scheme for automobiles, as it is filing papers and is in the final stages of the process, the company said. The company is planning to launch more electric scooters in the affordable segment, as it seeks to address some newer use cases in products which will be launched in the next financial year.

 

Despite a robust festival season, the two-wheeler industry reported flattish volumes in the last two months of 2024. With the upcoming wedding season and some festivals coming up from March, the company expects demand momentum for the two-wheeler industry to improve here on. While the festival season in October did "suck up" some demand from November and December, Hero MotoCorp said it is seeing good traction currently.

 

Hero MotoCorp expects prices of their two-wheelers to increase 1-2% from April onwards once the second iteration of the onboard diagnostic norms kick in, mostly due to the additional hardware that could be installed in products. This marginal increase in prices will be valid across the industry, the company said. The loan book size of Hero FinCorp in the reporting quarter was INR 555 billion, up 13% on year.

 

At 1225 IST, shares of Hero MotoCorp traded at INR 4,251.75 on the National Stock Exchange, up 0.5%.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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