Hero MotoCorp , the world's largest manufacturer of motorcycles and scooters, has announced its financial results for the first quarter, revealing a mixed performance with a slight decline in revenue but a marginal increase in profit.

Financial Highlights

For the quarter ended June 30, Hero MotoCorp reported:

The company's consolidated revenue stood at ₹9,728.00 crore, while consolidated profit after tax (PAT) reached ₹1,706.00 crore, a significant jump from ₹1,032.00 crore in the previous year. This substantial increase in consolidated profit includes a one-time gain of ₹722.00 crore due to the dilution of the company's share in associates following a public issue and private placement.

Operational Performance

Hero MotoCorp sold 13.67 lakh units of motorcycles and scooters during the quarter. The company implemented a temporary production pause as part of its planned operational strategy, which impacted the overall dispatch volumes for the quarter but has since normalized.

Product and Market Developments

During the quarter, Hero MotoCorp strengthened its product positioning through portfolio enhancements:

• In the 125cc scooter segment, the Destini 125 and Xoom 125 led the charge.
• The HF Deluxe portfolio in the 100cc motorcycle segment was expanded with the launch of the HF Deluxe Pro.
• The company's electric mobility business under the VIDA brand continued to see steady momentum.

Global business operations outperformed industry trends, driven by growth in key international markets and an expanding portfolio across both premium and commuter motorcycles.

Electric Mobility and Innovation

Hero MotoCorp has made significant strides in the electric vehicle (EV) segment:

• VIDA introduced a subscription-based Battery-as-a-Service (BaaS) model.
• A new product, the EVOOTER VX2, was launched.
• A high-impact television and digital campaign – 'Charging Simple Hai' – was unveiled during the Indian Premier League (IPL) season, highlighting VIDA's removable battery technology.

Global Expansion and Brand Initiatives

The company announced the launch of four new products in Sri Lanka in partnership with its distributor, Abans Auto:

• Xoom 110 scooter
• Hunk 160R 4V motorcycle
• Xtreme 125R motorcycle
• HF Deluxe motorcycle

Hero MotoCorp also expanded its premium retail network, inaugurating the first Hero Premia Stores in Murshidabad, Nashik, and Muzaffarpur, with a fourth in Bangalore, marking 100 such outlets across India.

Management Commentary

Vivek Anand, Chief Financial Officer of Hero MotoCorp, commented on the performance: "Our profitability and margins remained resilient, supported by strong demand for our entry & deluxe motorcycles and 125cc scooter segments. We are witnessing good traction in our electric mobility business (VIDA), and global operations also remained ahead of industry, reflecting the strength of our brand in international markets. With favorable customer sentiment, upcoming festive season, and a robust pipeline of new product launches, we are confident of sustaining and driving growth in the coming quarters."

Future Outlook

Hero MotoCorp expects demand to remain healthy in the coming quarters, buoyed by the upcoming festive season and a robust lineup of new products. The company's focus on electric mobility and global expansion is likely to play a crucial role in its future growth strategy.

As Hero MotoCorp navigates the evolving automotive landscape, its emphasis on product diversification, electric mobility, and international market expansion appears to be setting the stage for sustained growth and innovation in the two-wheeler segment.

Hero MotoCorp , India's leading two-wheeler manufacturer, is anticipated to report a downturn in its financial performance for the recent quarter, according to brokerage estimates. The company is expected to face headwinds in both revenue and profitability, reflecting challenges in the two-wheeler market.

Revenue and Profit Projections

Analysts project a 6% year-on-year decline in revenue for Hero MotoCorp, accompanied by an estimated 5% drop in net profit. These forecasts paint a picture of a challenging quarter for the automotive giant.

Volume Declines and Production Challenges

The company's performance is primarily affected by a significant decrease in sales volume:

• Volume decline: 11-12%
• Total units sold: Approximately 1.37 million

This substantial reduction in sales is attributed to two main factors:

1. Production challenges faced by the company in April
2. Persistent weakness in demand for the entry-level 110cc motorcycle segment

Realizations and Product Mix

Despite the volume decline, Hero MotoCorp is expected to see some positive trends in its product mix and pricing:

• Realizations are projected to increase by 7-10%
• Factors contributing to higher realizations include:
  • A richer product mix
  • Implementation of price hikes
  • Increased contribution from spare parts and exports

However, these improvements in realization are not anticipated to fully offset the impact of the volume decline.

EBITDA Margin Pressure

Brokerages forecast a contraction in Hero MotoCorp's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins:

• Expected EBITDA margin range: 13.80% to 14.10%
• Projected contraction: 26 to 60 basis points

The pressure on margins is attributed to several factors:

• Weak sales of Internal Combustion Engine (ICE) vehicles
• Higher contribution from the Electric Vehicle (EV) segment
• Expenses related to new product launches
• Lower operational scale

Key Focus Areas

Investors and analysts will be closely watching for management commentary on several crucial aspects:

1. Outlook for rural demand
2. Prospects for the entry-level segment
3. Updates on Hero MotoCorp's EV roadmap and strategy

As Hero MotoCorp navigates through these challenges, the company's ability to adapt to changing market dynamics and its progress in the evolving EV space will be critical factors to watch in the coming quarters.