Hero MotoCorp , the world's largest manufacturer of motorcycles and scooters, recently reported its October sales figures, revealing a mixed performance with some notable highlights. The company's stock price reflected these results, with shares declining 5.17% on Tuesday, marking the sharpest single-day decline since February.

October Sales Performance

Hero MotoCorp's October sales showed a year-on-year decline and missed market expectations:

Despite the overall decline, the company saw significant growth in scooter sales and exports, indicating diversification in its product mix and market reach.

Price Cuts and Market Response

Hero MotoCorp implemented price cuts of up to Rs 15,743 following GST rate reduction from 28% to 18% on two-wheelers under 350cc. However, these price reductions did not boost sales as expected. In contrast, competitors Bajaj Auto, TVS Motor, and Eicher Motors posted 8-13% growth.

Market Performance and Analyst Outlook

The stock has risen 33% since August and trades at 19.5 times forward price-to-earnings, above its five-year average of 18 times. Analysts cite market share losses and limited earnings visibility as concerns, with consensus estimates suggesting only 5% potential upside from current levels.

Festive Season Performance

Despite the October sales miss, the festive season brought positive results for Hero MotoCorp:

• Recorded 994,690 unit registrations on VAHAN during the festive period
• VIDA, the company's EV brand, saw impressive growth:
  • 16,000 VAHAN registrations in October
  • 24% growth over the previous month
  • 117% year-on-year growth

Global Expansion

Hero MotoCorp has made significant strides in its global business:

• Entered European markets including Italy, Spain, the UK, and France
• Introduced Euro 5+ compliant models, led by Hunk 440 and Xpulse 200
• Expanded presence to 52 countries across 5 continents
• Reported 42.8% year-on-year growth in global sales for October

Market Outlook

Despite the mixed October performance, there are some positive indicators for Hero MotoCorp:

• Citi maintained a Buy rating with a target price of Rs 6,100
• Strong festive retail demand indicated by 70% year-on-year rise in VAHAN registrations
• Expectations of firm retail momentum potentially leading to inventory restocking in November and December

Hero MotoCorp's ability to navigate challenges while capitalizing on growth opportunities in scooters, exports, and EVs suggests a resilient business model. Investors and market watchers will likely keep a close eye on how the company leverages its festive season success and global expansion to drive growth in the coming months, despite the recent sales miss and stock price decline.

Hero MotoCorp , the world's largest manufacturer of motorcycles and scooters, has concluded the festive season with a mixed sales performance, showing robust retail figures but a decline in domestic wholesale numbers. The company's latest figures reveal significant growth in certain areas while facing challenges in others.

Record-Breaking Retail Performance

Hero MotoCorp reported impressive retail sales figures for October:

This marks the second consecutive month of over 6 lakh wholesale dispatches, underscoring the company's strong market presence during the festive season.

Domestic Sales Decline

Despite strong retail performance, Hero MotoCorp faced challenges in domestic wholesale:

• Domestic sales declined by 8% to 6.5 lakh units compared to 6.57 lakh units in the previous year.
• Total two-wheeler sales decreased 6.4% to 6.36 lakh units year-on-year, falling short of estimates of 6.56 lakh units.

Export Growth

The company's exports showed strong growth:

• Exports rose 42.8% to 30,979 units versus 21,688 units in the previous year.

GST Rate Reduction and Price Cuts

Following a GST rate reduction on two-wheelers under 350cc from 28% to 18%, Hero MotoCorp implemented significant price cuts:

• Price reductions of up to Rs 15,743 across its motorcycle range.
• The Karizma 210 saw the largest reduction.
• Xpulse 210 and Xtreme 250R models saw price cuts of Rs 14,516 and Rs 14,055 respectively.
• Scooter models including Pleasure Plus, Destini 125, and Xoom 160 also received price reductions.

Despite these substantial price cuts, they did not translate into increased domestic sales across the company's two-wheeler segments.

Segment-wise Performance

The company's growth was driven by strong demand across its product range:

• Popular models like Splendor, Xpulse, and Glamour X led the motorcycle segment.
• The scooter range, including Destini, Xoom, and Pleasure, contributed significantly to the sales momentum.

VIDA Electric Scooters: A Growing Success

VIDA, Hero MotoCorp's electric vehicle division, demonstrated remarkable growth:

The VIDA VX2 EVOOTER, in particular, has been a key driver of this growth, maintaining a robust bookings pipeline.

Global Expansion and Performance

Hero MotoCorp's global business segment showed impressive results:

The company has expanded its presence to 52 countries across 5 continents, recently entering European markets with Euro 5+ compliant models.

Factors Contributing to Performance

Several factors have influenced Hero MotoCorp's performance:

1. Sustained festive momentum
2. Renewed customer confidence
3. Favorable market conditions in certain segments
4. GST benefits announced by the government
5. Challenges in domestic wholesale market

As Hero MotoCorp continues to strengthen its mobility ecosystem across ICE, premium, and EV segments, it faces both opportunities and challenges. The company's focus on customer-centric innovation and expanding global footprint may contribute to its future success, while it works to address the decline in domestic wholesale sales in the competitive two-wheeler market.