Analyst Call
Hero MotoCorp to invest INR 15 bln to add 2-wheeler capacity
This story was originally published at 13:00 IST on 6 May 2026
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--Hero MotoCorp: Didn't see demand soften due to West Asia military conflict
--Hero MotoCorp: Exported total 402,000 units in FY26
--Hero MotoCorp: Saw INR 2,000 per unit rise in revenue in Q4
--Hero MotoCorp: 5 week inventory available at dealers, less for EV scooters
--Hero MotoCorp: Saw INR 2,000 per unit rise in commodity costs in Q4
--Hero MotoCorp: See H1 growth to be stronger than H2 on high base effect
--Hero MotoCorp: Present in 50% Bangladesh mkt, to launch in rest this yr
--Hero MotoCorp: Plan to expand in new countries
--Hero MotoCorp: Planning new launches next year in Africa
--Hero MotoCorp:Close to adding 50% capacity of electric vehicles in a month
--Hero MotoCorp: In process of doubling production capacity of Xoom scooter
--Hero MotoCorp: Taken 2% price hike, doesn't cover input costs rise yet
--Hero MotoCorp: Taken calibrated price hike in Apr, may explore more ahead
--Hero MotoCorp: Planning big capacity expansion in electric vehicles
--Hero MotoCorp: Committed to maintaining margin guidance of 14-16% in FY27
--Hero MotoCorp: Expect launches of commuters, high displacement bikes, VIDA
--Hero MotoCorp: Margin hit owing to high input costs; to find a way around
--Hero MotoCorp: Expect transitionary impact on margins in short term
--Hero MotoCorp: Two-wheeler demand has started on a positive note in FY27
--Hero MotoCorp: Expect many more exciting launches in FY27
--Hero MotoCorp: To spend INR 7 bln capex in global park in South India
--CONTEXT: Comments by Hero MotoCorp mgmt in post-earnings analyst call
--Hero MotoCorp: Committed capex of INR 15 bln in FY27
By Sunil Raghu & Gunjan Rajput
AHMEDABAD/NEW DELHI – Hero MotoCorp. Ltd. said it wants to encash on rising demand for two-wheelers and would invest INR 15 billion in 2026-27 (Apr-Mar) as capital expenditure to expand capacity as it sees continued growth in two-wheeler demand ahead. It is also looking to invest another INR 7 billion in setting up a global facility for manufacturing and research and development in South India, with plans for more "exciting" launches in FY27 to cash in on positive demand it sees in the beginning of current financial year, the company management told analysts and investors on Wednesday, in a call held post Jan-Mar and FY26 earnings.
"...this Capex is going to expand our capacity in scooters but for some of our models that are doing very well, we are doubling our capacity. In Electric Vehicles, 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, and we are seeing great momentum for our VIDA (electric scooter) plan," the management told analysts.
Hero MotoCorp's net profit growth for the March quarter was the sharpest in seven quarters on a year-on-year basis, at INR 14.01 billion, up nearly 30% on year and almost 4% sequentially. Its top line rose nearly 29% on year and almost 4% on quarter to INR 127.97 billion, its strongest revenue growth in 15 quarters. It said the improvement in its earnings before interest, tax, depreciation, and amortisation margin was driven by a favourable product mix and cost efficiencies.
Hero MotoCorp's performance in the financial year 2025-26 (Apr-Mar) was anchored by consistent gains in its core internal combustion engine business, with the company expanding its market share across key segments. Growth was broad-based across vehicles with engine capacity ranging from 100 cubic centimetres to 125 cubic centimetres, scooters, and premium motorcycle segments. The company said a series of product refreshes and the highest-ever sales in festival season had also helped boost the top line.
The company sold 1.71 million units of motorcycles and scooters in the March quarter, up 24% on year. It sold 6.47 million units of motorcycles and scooters in FY26, up 10% over the previous year. The management said that it has not seen any impact of West Asian military conflict or any demand fall in the sector, with inventory levels with dealers currently at five weeks. The inventory, in case of electric vehicles, is even lesser than five weeks, they said. The management now seeks to increase production capacity of electric vehicles by 50% in the current quarter itself, and double the production capacity of Xoom scooters, with plans to launch commuter two-wheeler, high displacement motorcycles and VIDA electric vehicles.
Other than domestic market, the company exported a total of 402,000 vehicles in FY26 and the management of this two-wheeler major is now bullish also on growth globally. This year, it plans to expand to newer countries, including new launches in Africa and expanding in Bangladesh from its present in 50% market to entire neighbouring country. "...Latin America, we have good presence and we should see more opportunity there. We are relatively small in Africa, but we are now opening many countries," the company management said. "We have re-entered after a bit of a jitters in Sri Lanka last year, and we are rapidly gaining share in Sri Lanka."
Despite being bullish on growth and demand, the company management said the company's growth in first half or Apr-Sept would be stronger than the second half of FY27. "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 and I think the second half will be relatively lower than the first half," the management said. "...for the full year as a whole, we do continue to see growth momentum that you have seen in our overall revenue growth of FY26."
The growth optimism is tapered due to a rise in commodity costs for the company, by little over INR 2,000 per vehicle. Though the company did raise price of its vehicles by 2% in April, leading to increase in revenue by INR 2,000 per unit, this increase failed to fully off-set rising commodity costs. Other than being open to further price increases if required, for now the company is seeking to cut input costs for manufacture of its vehicles. Despite these efforts and its commitment to maintain margin guidance of 14-16% in FY27, the company management sees transitionary impact on margins in the short term.
At 1245 IST, shares of the company traded at INR 5,074.50 on the National Stock Exchange, down 0.7%. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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