Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hero MotoCorp Ltd (BOM:500182, Financial) reported its highest-ever quarterly revenue of INR10,463 crores, reflecting a year-on-year growth of 11%.
- The company achieved its highest-ever quarterly EBITDA of INR1,516 crores, marking a growth of 14%.
- Hero MotoCorp Ltd (BOM:500182) recorded its highest-ever quarterly PAT of INR1,204 crores, also a growth of 14%.
- The company saw a significant improvement in its EBITDA margin for the ICE business by 160 basis points to 16.5%, driven by mix improvement and lower material costs.
- Hero MotoCorp Ltd (BOM:500182) achieved the highest-ever festival sales of 1.6 million units, with a 16% revenue growth during the festive period.
Negative Points
- There are concerns about asset quality in the two-wheeler financing sector, with some financiers reporting issues.
- Hero FinCorp, the company's financing arm, has seen an increase in delinquencies and collections slowing down, impacting profitability.
- The company continues to invest heavily in its EV business, which currently impacts overall EBITDA margins by 200 basis points.
- Despite strong festive sales, there is a concern about demand sustainability post-festive season, as seen in previous years.
- Hero MotoCorp Ltd (BOM:500182) faces competitive pressures with other OEMs offering discounts and cutting list prices.
Q & A Highlights
Q: How does Hero MotoCorp's festive season growth compare to the industry, and is demand sustaining post-festive season?
A: Ranjivjit Singh, Chief Growth Officer, noted that Hero MotoCorp experienced a 13% growth during the festive season, outperforming the industry. The demand was strong across both rural and urban areas, and the positive trend is expected to continue, supported by upcoming marriage seasons and positive economic indicators.
Q: What factors contributed to the improvement in Hero MotoCorp's margins, and how will future investments affect them?
A: Niranjan Gupta, CEO, explained that margin improvements were driven by commodity benefits, LEAP savings, and a better product mix. The company plans to continue investing in growth, particularly in the EV segment, while maintaining a margin range of 14% to 16%.
Q: How is Hero MotoCorp performing in the EV market, and what are the future plans for this segment?
A: Swadesh Srivastava, Head of Emerging Mobility Business Unit, reported that Hero MotoCorp achieved a 5.4% market share in the EV segment during the festive season, with strong growth in cities like Kolkata and Mysore. The company plans to expand its EV portfolio to cover more price segments and user needs by the end of the calendar year.
Q: What is the outlook for Hero MotoCorp's premium portfolio, and what scale is needed for profitability?
A: Niranjan Gupta stated that leveraging existing manufacturing and distribution scales allows Hero MotoCorp to achieve normalized margins in the premium segment with a market share of 8% to 10%. The company is expanding its premium product offerings and store network to support this growth.
Q: How is Hero MotoCorp addressing the quick commerce segment, and what products are being developed for this market?
A: Niranjan Gupta mentioned that the company is working on customized B2B formats for the quick commerce segment, with a focus on both ICE and EV products. The institutional business segment is actively engaging with this market, and the Vida team is developing tailored solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
