Hero MotoCorp's earnings to remain stable but slowing sales will impact revenue
The spotlight at Hero Motocorp, the world's largest two-wheeler manufacturer, will once again be on Pawan Munjal, the 71-year-old executive chairman who left the position of managing director and CEO two years ago.
In April, the Delhi-based player saw high-level exits, including CEO Niranjan Gupta and chief business officer Ranjivjit Singh.
The company has appointed Vikram Kasbekar as acting chief executive officer to replace Gupta, who was elevated to the position in 2023.
These exits come as Hero's dominance is being challenged by Honda Motorcycle and India Pvt. Ltd.
Hero's sales increased by 4% to 5.6 million scooters and motorcycles in FY2025, compared to Honda's 18% growth to reach 5.3 million two-wheeler sales. The Delhi-based firm started the last fiscal year with a lead of 900,000 units, which shrank to less than 300,000 units by 31 March 2025.
Also read: Ather Energy IPO: Tiger Global-backed E2W maker's ₹2,981-crore issue to open on Monday; GMP to price—10 key points
Moreover, the company is trailing prominent legacy rivals like Bajaj Auto Ltd and TVS Motor Co. Ltd in the electric vehicle segment.
Hero sold just 48,674 electric Vida scooters in FY2025, growing its market share from 1.8% to 4.2% within a year to reach 48,674 units. However, this is far behind its rivals, TVS Motor and Bajaj Auto, who sold 237,576 and 230,806 scooters, respectively, during the year.
To make matters worse, Hero's scooter sales fell by 2% to 391,419 units in FY25 from 400,453 units in FY24, even as the overall scooter volumes grew by 17% to cross the pre-pandemic level of 6.7 million.
Munjal, who first became the managing director and CEO in 2001, when the Hero-Honda combination had become the largest two-wheeler manufacturer in the world, may have to help prepare the company to better compete with its rivals.
Munjal faces three challenges: finding a full-time CEO, increasing two-wheeler sales growth, and helping the company establish a presence in the electric vehicle market.
Also read: Is Ather's IPO a smarter bet than Ola in a market running low on charge?
Investors have taken cues from the company's performance so far. In 2025, its share price declined by 4.5%, as against a 1.1% increase in Nifty Auto.
Against this background, Mint puts the spotlight on five things to watch out for when the company announces its January-March results on Tuesday.
Revenue
According to the average estimates of four analysts, the company's revenue might post a growth of 2.1% to ₹9,710 crore during the January-March quarter.
The modest growth in the quarter comes on the back of slow growth in volumes in the market. But increasing premiumisation of its portfolio will help the company.
'Volume growth remained subdued as 2W (two-wheeler) demand lagged expectations, resulting in a decline of 1% YoY (year-on-year). However, we expect its average selling price to improve ~3% YoY, led by an improved mix of 125cc. This is likely to drive revenue growth of 2% YoY," analysts at Motilal Oswal said in a 7 April note.
Profitability
Four analysts estimate profitability will grow nearly 8% to reach ₹1,097 crore during the quarter.
This will come on the back of improving margins of the company, as per the analysts. 'Due to a richer product mix and cost control efforts, Ebitda margins will likely improve by 27/9 bps YoY/QoQ," analysts at Axis Securities wrote in a 9 April note.
Analysts also expect the company's promotional expenditures to come down compared to the previous quarter, which should help improve margins and profitability.
Also read: TVS Motor remains bullish on growth as FY25 ends with strong momentum
Increasing EV performance
Its recently launched electric Vida scooter has managed to give a push to its EV sales, but it remains far behind the leaders.
Management's commentary on the product launch pipeline, investments, and how it sees the bids of players like Ola Electric and Ather Energy to develop electric motorcycles, which remains its stronghold.
Analysts have recently noted that the lower total cost of ownership has pushed several cost-conscious buyers to shift towards electric two-wheelers.
Trend of premiumisation
The increasing average selling price due to more 125cc motorcycles share in the market is a trend which is helping even Hero protect growth in topline.
Amid weak consumer sentiments in the overall economy segment of motorcycles, the share of 75-110 cc motorcycles fell from 62% in FY2019 to 46.5% in January 2025.
'Given lower market share in scooter and premium motorcycle segments, we believe it will continue to weigh on HMCL's overall market share," analysts at Kotak Institutional Equities said in a 12 March note. 'As a result, we expect HMCL's market share in the motorcycle segment to decline to 41.4% in FY2027E from 43.1% in FY2024."
Management's commentary on how it plans to navigate the market will be a key highlight post the announcement of results.
Plan for exports
The company saw a strong 44% surge in exports to 289,668 units in the financial year 2025, becoming a key growth driver for the company in the last financial year.
The surge was partly able to offset the impact of slow sales in the domestic market, according to analysts.
Given the trade uncertainties impacting the global supply chains, management's commentary on how it plans to further increase exports will be closely watched.
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