Whalesbook
Hero MotoCorp Ltd. has reported its strongest-ever quarterly financial performance, with the third quarter of fiscal year 2026 marking a significant milestone. The company's revenue from operations surged 21% year-on-year to ₹12,328 crore, driven by robust volume growth and improved realisations. This performance was underpinned by healthy demand trends across both urban and rural markets, where Hero MotoCorp maintains a dominant position, particularly in rural areas.
Record Quarterly Performance
The company's total volumes increased by 16% year-on-year, supported by a 4.2% improvement in realisations. Beyond vehicle sales, the parts, accessories, and merchandise business also delivered its highest-ever quarterly revenue of ₹1,673 crore, reflecting an 8% year-on-year growth. Despite ongoing investments in the electric vehicle (EV) segment, which impact profitability, Hero MotoCorp managed to expand its overall EBITDA margin by 22 basis points to 14.7%.
Demand Momentum and Outlook
Management forecasts continued industry growth, expecting double-digit expansion in the fourth quarter of FY26 and high single-digit growth for FY27, albeit on a higher base. Hero MotoCorp anticipates outperforming this industry growth. The strong festive season and new model launches have bolstered demand, particularly for scooters and premium motorcycles.
Global Reach and Export Growth
Hero MotoCorp's global business emerged as a significant growth driver. Export volumes climbed 41% year-on-year, with international market share improving to 7.5%. New market entries in Europe and sustained traction in Latin America, West and North Africa, and the Philippines contributed to this surge. The company's localised manufacturing footprint helped mitigate impacts from tariff changes in markets like Mexico.
Market Dominance and EV Push
Within India, Hero MotoCorp reinforced its market leadership across segments. The Splendor model achieved its highest market share since FY18 in the 100cc deluxe category. The 125cc segment also saw gains. In scooters, Hero MotoCorp outperformed the industry, increasing its market share to approximately 7%. The VIDA electric vehicle arm continued its scaling efforts, with market share rising to 10.8% and achieving significant penetration in numerous towns, positioning it among the top EV players in several cities.
Valuation and Investor Stance
The stock is currently trading at approximately 19.6 times projected FY27 earnings, which analysts consider a reasonable valuation. Given the company's strategic initiatives and strong long-term growth prospects, the recommendation for investors is to accumulate the stock for long-term holding. The company also declared an interim dividend of ₹110 per share.