Hero MotoCorp Q2 FY27 Earnings Call: Guides 14-16% Margin Corridor, EV Capacity Doubles to 30,000 Units/Month (HEROMOTOCO)

Hero MotoCorp Ltd held its Q2 FY27 earnings call on October 28, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Double-Digit Volume Growth, Premiumization Lifts Revenue

• Standalone revenue of Rs.14,687 Cr (+21% YoY) — outpaced wholesale volume growth of +10.5% YoY (ICE +8.4%, EV +98%), driven by a 5% positive mix impact from ICE/EV scooters and premium variants plus calibrated pricing.
• EBITDA of Rs.1,968 Cr (+8% YoY) — margin expanded 10 bps QoQ to 13.4% despite 30 bps QoQ gross margin compression from broad-based commodity inflation (steel, aluminum, plastic, rubber, freight) amplified by currency depreciation.
• PAT of Rs.1,456 Cr (+5% YoY) standalone; consolidated PAT of Rs.1,861 Cr (+41% YoY) included a Rs.397 Cr one-time gain from equity consolidation of an associate company following its QIP and private placement capital raise.
• H1 FY 2026-2027 closed with revenue +28% YoY and PAT +16% YoY.
• Operating cash flow of Rs.2,159 Cr in Q2 FY 2026-2027, nearly doubling over the prior comparable period on working capital optimization; record-low receivables posted in Q1 FY 2026-2027.
• ICE portfolio EBITDA margin of 15.6% in Q2 FY 2026-2027, stable sequentially; the EV business dragged company-level margin by 220 bps.

Share Gains Every Month; Scooters and 125cc Momentum

• ICE market share gained in every month of Q2 FY 2026-2027 (per Vahan registration data), with ICE retails +24% YoY; rural demand equal to or better than urban in Q2 and quarter-to-date.
• Industry tailwind — Q2 FY 2026-2027 two-wheeler retails grew over 27% (ICE +23%, EV +82%); H1 FY 2026-2027 industry retails grew over 20% YoY and 11% on a two-year CAGR basis, which management cited as healthy even after discounting GST-driven pent-up demand.
• Scooters: fifth consecutive quarter of YoY share expansion — South India scooter share crossed 10%, dispatches +34% YoY in Q2 and >50% in H1 FY 2026-2027; ICE scooter share up 160 bps FY 2026-2027 YTD, with ICE scooter growth north of 50% YTD expected to continue (period unspecified).
• 100cc motorcycles grew 10% in Q2 and 11% in H1 FY 2026-2027; Splendor grew over 20% with the premium XTEC variant now over 25% of Splendor volumes.
• 125cc: H1 FY 2026-2027 volumes +19% with Hero moving from #3 to #2 in the segment (per CBO Ashutosh Verma); Glamour new variants growing north of 50% in H1; the 125cc category itself underperformed other categories, with price inflation and fuel-efficiency focus pulling some customers to 100cc and GST benefits for 150-160cc pulling others upward.
• Festive retail growth of 24% FY 2026-2027 festival-to-date on Hero's ~100-day festive definition (from Ganesh Festival/Onam); an analyst flagged Vahan moderation across categories and day-on-day like-for-like festive share losses.

Capacity-Led Share Gains; Drag Narrowing, PLI Upside

• EV EBITDA drag narrowed to Rs.168 Cr in Q2 from Rs.232 Cr in Q1 FY 2026-2027 (a Rs.70 Cr QoQ reduction); EV revenue was Rs.1,000 Cr in Q2 FY 2026-2027 (CFO Vivek Anand).
• Vida retails +74% YoY to 66,000 units in Q2 (retails +105% YoY with a 170 bps share gain in H1 FY 2026-2027); share hovering close to 13.5-14% in October (Q3 FY 2026-2027) month-to-date, with the entire industry currently capacity constrained — demand exceeding supply.
• EV capacity doubled to 30,000 units/month in September 2026 (from 15,000 at end of FY 2025-2026), targeting 45,000 units/month by Q4 FY 2026-2027 and expansion already underway to exceed 80,000 units/month by Q2 FY 2027-2028; dealer stock at ~1 day.
• PLI accruals of Rs.63 Cr in Q2 (~6.5% of EV revenue, ~70% of portfolio covered); with PLI certification received for nearly 100% of the portfolio in October 2026, management guided to almost 13% of EV revenue translating into PLI benefit from Q3 FY 2026-2027, scaling as revenue grows.
• Premium skew — the 4.4 kWh removable-battery variant is the best performer; premium range pulling close to 40% of the Vida portfolio (too early to comment on the stable blend); Vida retailed through ~700 outlets (regular supplies to ~450) vs ~8,500 total points of sale, with more outlets to open as capacity scales in FY 2026-2027.
• EV not yet EBITDA positive — management cited a later start on portfolio expansion, ongoing brand/product investment, and the need for scale; no timeline specified for reaching EBITDA positive. Charging network exceeds 6,000 chargers nationally, with monetization begun via associate companies such as Euler; product-level synergies with Ather not currently being explored.

Inflation Neutralized for Now; 14-16% Corridor "Next Few Quarters"

• Material inflation of ~1% QoQ in Q2 (H1 FY 2026-2027 totaled ~5.5%, half taken as price increases); a ~Rs.1,000 per unit price increase was effective 1 October (Q3 FY 2026-2027).
• Four-point mitigation plan — higher premium-variant mix plus parts/accessories/merchandise growth; accelerated LEAP savings and curtailed discretionary spending; judicious pricing in select models and markets; aggressive EV unit-economics improvement.
• Q3 FY 2026-2027 margins guided broadly stable despite a marginal uptick in input costs expected, with the extended West Asia conflict and sustained commodity inflation cited as persistent pressures.
• Management committed to the 14-16% EBITDA margin corridor over the medium term (period unspecified) and expects to achieve the target range in the next few quarters (from Q3 FY 2026-2027 onward) as the commodity cycle stabilizes; CEO Harshvardhan Chitle reiterated margin recovery over the next few quarters — not short term (H2 FY 2026-2027 into FY 2027-2028).
• Growth prioritized over margin — the CEO said the company will not compromise or cut investments needed for growth; margin recovery to come from non-discretionary levers (unit economics, volume leverage, LEAP BOM cost reduction), not reduced brand/discretionary spend.
• Rural demand resilient — CBO Ashutosh Verma said rural demand is as good as, if not better than, urban; El Nino apprehensions did not materialize as badly as feared and overall sowing is almost at par with the year-ago period despite drought in certain parts of the country.

Premium Reset Underway; Export Concentration Exposed

• Premium results "not been great" so far (management's own acknowledgment) — a premium business unit was carved out in Q2 FY 2026-2027 under a newly appointed CBO; Xtreme 160R and Xtreme 250R refreshes launched in October 2026 as segment-fastest motorcycles, drawing strong media feedback and an initial uptick in dealership inquiries; 3-4 key premium launches planned in the remainder of FY 2026-2027.
• Xpulse franchise retails grew over 30% in H1 FY 2026-2027 with >35% share in the adventure bike segment; Premia premium network reached ~150 stores (~2 years since launch), with rapid expansion planned and structured community-building at premium dealerships from December 2026 (FY 2026-2027) onwards.
• Exports retails still grew 19% despite disruption — dispatch and customs-clearance disruption in a key Latin American market after a devastating earthquake, plus a demand slowdown in Bangladesh on a sharp fuel-price increase linked to the ongoing Gulf War; management expects a return to double-digit export growth in Q3 and Q4 FY 2026-2027.
• Concentration risk flagged — Colombia accounts for close to 25% of the exports business (as of Q2 FY 2026-2027) with similarly high exposure to Bangladesh; when both faced challenges in the same quarter, the remaining ~50% of export markets could not offset the impact. No specific timeline was provided for a more balanced export distribution.
• Diversification roadmap — a manufacturing facility is being set up in Brazil supported by a flex-fuel portfolio for that market, presence in Mexico is increasing, and Africa expansion (where management noted Hero is "extremely underrepresented") begins with new launches and country openings starting Q3 FY 2026-2027.
• Flex-fuel motorcycles: ~15,000 dispatches in the little over 2 months since launch (FY 2026-2027); rollout deliberately controlled to select dealerships due to limited E85 availability across the country, though customers are buying even in E20-only regions.

Festive Momentum, Capacity Bets and Parts Investment

• Industry outlook — management expects mid-to-high single-digit two-wheeler industry growth during the FY 2026-2027 festive period (already visible festival-to-date), and is planning for mid-to-high single-digit industry volume growth in H2 FY 2026-2027, with ICE in low single digits and EV taking the industry to high single digits.
• Scooter + EV category mix — ICE plus EV scooters currently ~41% of industry mix (FY 2026-2027, per analyst); peers (per analyst) are calling for 45% and then 50% by FY29; the CEO endorsed the continued upward trajectory over the next 2-3 years but declined to quantify the endpoint ("44, 45, 47 — time will tell").
• Capex on track for FY 2026-2027 guidance of Rs.1,500 Cr, with ~Rs.600 Cr deployed in H1; Splendor capacity expanded, ICE scooter capacity doubled to 80,000 units/month, and the Neemrana premium assembly line expanded.
• Global Parts Center 2.0 — a greenfield parts center with over Rs.700 Cr investment announced to double parts-handling capacity (timeline not specified); parts revenue +27% YoY in Q2 (second consecutive quarter above 25%); Phase 2 at Tirupati expected fully operational by end of CY 2027.
• E-motorcycle pipeline — management declined to share timeline or product details, stating it will keep analysts informed closer to launch (period unspecified); industry e-motorcycle penetration remains in very low single digits with product-market fit still being established.