Hero MotoCorp Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kapil Singh - Nomura Securities Co., Ltd. - Analyst : Congratulations on a strong performance and also the rankings for Dow Jones Sustainability Index. My first question is on the demand environment itself. I saw that company has grown around 13% in the festive season. How does it compare to the industry growth, if you have any data around that? And are you seeing after the festive season also demand sustaining, that would be my first question.

Question: Kapil Singh - Nomura Securities Co., Ltd. - Analyst : That's great to hear. sir, second question is on margins. We saw very good improvement on a quarter-on-quarter basis. Probably the other players may not have seen this when I look at the data. So it's a 2-part question. First, if you could just let us know, is it just the parts mix or any other factors are here? And second, we can also see -- particularly, I was talking about gross margin. And the second is, we can also see investments going on as well from your side, and you have talked about it for some time to guide growth. So how should we see the investments for growth continuing? EV, in particular, you're still investing close to between 150 to 200 basis points. Does -- do you see a visibility that localization and PLI benefits by when could they be available? And as they come, should we expect margins to improve? Or should we expect that you would invest more for growth as you have been talking about?

Question: Kapil Singh - Nomura Securities Co., Ltd. - Analyst : Sure, sir. And just on the PLI part as well, if you could comment by when can -- are you expecting to be eligible?

Question: Amyn Pirani - JPMorgan - Analyst : Congratulations on a strong performance. So obviously, this question has been addressed partially with Kapil's question. We are hearing all different kinds of news flow on automotive growth moderating, slowing down. We have heard from some finances also, especially on the wheeler side that asset quality is starting to become a problem. So obviously, we are getting into marriage days that helps you on a sequential basis, but generally, over the next 6 to 9 months, are you seeing any signs that the momentum that we have seen in domestic two-wheelers of the last 1.5 years? Is that moderating slowing down or things are going as they were in the last 6 to 9 months? Some color there would be quite helpful from the financing side as well as from a consumer inquiry sentiment side as well.

Question: Amyn Pirani - JPMorgan - Analyst : That's helpful. Sir, I can just maybe ask for some data points. What was the financing share in the current festive period? And how much of that was done by And also, how is the -- did you see any extra discounting or schemes in the market by competition, this festive vis-a-vis last festive?

Question: Amyn Pirani - JPMorgan - Analyst : Okay. So I think 26% of the 66. So 74% is done by external parties. Is that. Okay. Okay. Okay. And anything on the schemes in the market this will you see more competitive activity there vis-a-vis last festive?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Thank you for sharing that highlight release, it sort of answers a lot of questions. I had 2 follow-ups. One was on the demand continuing with what Kapil and Amyn also asked. How is -- how divergent is it between rural and urban? And the reason I ask this is because a lot of companies are talking about urban modulation. So on your book, you actually see both very clearly if you can sort of give us some comments on how did that 13% festive growth look between rural and urban and general color on both. That will be the first question.

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. So it's fair to assume that both were double digits for you guys, I mean, percentage points here and there, but both were similarly positive in the festive season, both of them as well as urban was in single digits?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. And the second question I had on the EV. Your market share that you speak about 20% share in 4 towns and 10% in 10 towns. I mean, what is it that we are getting right in these towns. Is it the brand Hero? Is it the EV? I mean if you can just share some color on how we are progressing in terms of scaling this business up because 20% market share does look quite intensive in 4 towns. So which towns are these? And what drives higher market share in these towns were lower in some other times? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 5:00AM, HROM.NS - Q2 2025 Hero MotoCorp Ltd Earnings Call

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : My first question is on the premium portfolio. We are making efforts in expanding the product portfolio as well as the network. At this stage, it appears that in volume terms, about 18%, 19% of our volumes are EVs plus scooters, plus 125cc and above. So just trying to understand from a margin perspective, what's the sort of scale we need to achieve to get that portfolio closer to corporate average margins?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Sure. That's helpful. Second question is on electric motorcycles. So I think you did make a very interesting presentation in January this year at the time of the Xtreme and the Mavrick launches. I think that you mentioned that you start with performance, then premium and over time go to big premium and mid-segment on motorcycles from FY26 and beyond. So I just want to understand how you're thinking about that plan and also on time lines for execution on that?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : That's right. That's right. The move from performance to mint and what is the time line for execution on that product plan?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. That's helpful. And lastly, just a quick follow-up. I think a few quarters back, Niranjan you said that roughly 55% to 60% of your inquiries were coming from rural versus the prior period of 40% of inquiries coming from rural towards the end of cohort. So I just want to understand, at this stage, if you could give us an update on what percentage of your inquiries are coming from rural? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 5:00AM, HROM.NS - Q2 2025 Hero MotoCorp Ltd Earnings Call

Question: Kumar Rakesh - BNP Paribas Exane - Analyst : My first question was on the financing side, here. But how has been the delinquency especially in the two-wheeler order book which you have in Hero FinCorp over the last quarter or 2?

Question: Kumar Rakesh - BNP Paribas Exane - Analyst : Yes. That is something which I notice that happen. My question was more specifically that your credit cost in the second quarter has gone up. So is that across the segments which you are seeing for two-wheeler would be an outlier or in the two-wheeler also we would have seen to have. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 5:00AM, HROM.NS - Q2 2025 Hero MotoCorp Ltd Earnings Call

Question: Kumar Rakesh - BNP Paribas Exane - Analyst : Fair enough. Okay. My second question was on the premium store strategy which we have. So we are starting to open about 100 stores at the end of this year. I would assume that we would further expand beyond that. So based on the strategy which you have on the premium store side, what kind of monthly premium volumes you would need to make that sustainable? And I would be assuming that we would talk about 30, 31 volume right now. Is that enough to expansion strategy that we have on the?

Question: Pramod Amthe - InCred Capital - Analyst : First question is regarding the export markets, Philippines were retailing and also gradual line in the coming What's the volume outlook if you look at a 5-year perspective, what these markets can bring into you because they seem to a pretty decent size?

Question: Pramod Amthe - InCred Capital - Analyst : And the second question is with regard to the quick commerce and a way that segment is shaping up where the two-wheelers might be used. How are you seeing that? Is there a steady or any reform What's the size of that market? What your product suite there? What stratgy for your products, both in the ICE and EV space costs in the short and medium term?

Question: Pramod Kumar - UBS - Analyst : Congratulations on the very good festive sales what you're seeing. Sir, my first question is really related to the buyer behavior because what we've seen, it's probably not only in two-wheelers, but also in other categories that demand going into the season was not strong, and demand really came up very strongly during the festive season because of various marketing efforts and some categories seeing good discounts. So -- and just trying to understand, is it like are we seeing that the customers like on the ground getting smarter and waiting is purchase for the festive season so that he gets better deals and of course, there's a festive cheer and all of that. Because the reason I ask this is, like, for example, last year, we had a counter retail of 1.4 million in 32 days. But the entire October, November, December Vahan, retails were a much weaker number in context of 32-day retails of 1.4 million. So I'm just trying to understand, are we seeing massive bunching up of demand which is happening on the festive season, especially in the rural markets because we are not seeing that momentum in Vahan registration data beyond the festive season as such. And I'm talking about last year as a specific example, because you had a very strong retail last month last year as well. So if you can just help us understand the buyer behavior.

Question: Pramod Kumar - UBS - Analyst : Okay. No, sorry, I understand that Niranjan. The reason I asked as per the math, you had like 43,000 odd retails every day on the counter last year. But if I look at the entire December quarter data for Vahan is 1.7 million, to start of 1.7. had January, the average retail is after the festive drop out like really badly. So I'm just trying to understand that. But nonetheless, I think thanks for the input. And on the rural, if you can just provide color because what you've seen is, but a lot of dealer feedback is that you've seen traction for EVs gaining in the rural markets -- semi-urban markets, let me put it that way. And even scooters and premium categories taken off in semiurban markets. So how are you seeing the trend at your land? Because you've got the deepest network by far. And I had a pretty solid portfolio in form of Xtreme now in the 125cc and Vida as well. So if you can just help us understand the changing buyer behavior on the semi-urban market, particularly?

Question: Nitij Mangal - Jefferies - Analyst : Can you talk a little bit more about what do you mean when you're saying you're planning to now invest more into brand building. What are the opportunities? What are the gaps that you're trying to do in terms of brand building?

Question: Nitij Mangal - Jefferies - Analyst : Spend the mind in terms of how that you want to take of spending?

Question: Nitij Mangal - Jefferies - Analyst : Okay. And the second question is you seem to have a lot of product launches in the next 6 months. We're talking about premium ICE scooters, the premium motorcycles. There was some plan for 3 to 4 EV models as well, I mean expansion of that portfolio. Can you talk a little bit more about, let's say, especially when you're thinking of ICE portfolio, what are you trying to do differently with these products? What are you -- like other gaps you have identified, especially that's on the scooter and the premium motorcycle side?

Question: Nitij Mangal - Jefferies - Analyst : And just 1 more follow-up on this. On the EV sports, is there a revised time line for launches?

Question: Joseph George - IIFL - Analyst : This is Joseph. Just one question. When you look at the incentive situation this festive compared to last festive? Have you seen a big swing? I know you have seen several news flow of 1 is discounting. But unlike last year, we have seen some of the OEMs come and cut list prices, which is quite a news. So your comments there? .