Hero MotoCorp Ltd delivered a solid December quarter (Q3FY26), with standalone revenue rising 21% year-on-year to ₹₹12,328 crore. Ebitda (earnings before interest, taxes, depreciation and amortization) margin expanded 22 basis points (bps) to 14.68%, despite investments in its electric vehicle (EV) business.
Overall growth quality was strong, led by a 16% rise in total volumes to 1.69 million units, supported by festive demand, GST (goods and services tax) rate cuts, and new model launches.
Management expects double-digit growth for the two-wheeler industry in Q4 and high single-digit growth for FY27, with Hero aiming to outperform the industry. In January, Hero’s sales volumes jumped 26% year-on-year.
Looking ahead, an improving sales mix will be a key earnings driver. Growth in premium segments, scooters, 125cc motorcycles, premium exports, and EVs, can boost average realizations and structurally strengthen margins, reducing reliance on entry-level motorcycles, which remain vulnerable to rural demand cycles and price fluctuations.
Scooters, 125cc motorcycles, EVs and exports are no longer side businesses for Hero, they are increasingly shaping where incremental growth is coming from. In Q3FY26, domestic scooter volumes rose 71% year-on-year to about 165,000 units. Hero’s scooter market share also improved sharply to around 7.7%, up about 200 bps supported by refreshed models such as Destini and Xoom.
In the 125cc motorcycle segment, models like Glamor X and Xtreme 125R have gained traction, with Glamor These segments, while more aspirational than entry-level bikes, are relatively still affordable, and are growing faster.
Within EVs, Vida’s EV volumes grew over 267% year-on-year in Q3FY26, with market share improving to around 11%, showing that Hero is gaining relevance in a category that will define the future of two-wheelers. Exports, meanwhile, grew over 40% to about 102,000 units with strong traction in markets like Bangladesh, Colombia, Africa and Latin America.
Motilal Oswal Financial Services expects Hero MotoCorp to deliver a volume CAGR of about 7% over FY25-28, driven by new launches and a ramp-up in exports. “HMCL will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments,” said the broking firm in a report dated 6 February.
Meanwhile, on profitability, the company expects EBITDA margin to be in the range of 14-16%. Here, commodity inflation, rupee depreciation and EV investments will continue to weigh on near term profitability. To offset this, Hero is implementing calibrated price hikes. Also, it is worth noting that the underlying ICE business is already delivering an EBITDA margin of around 17%, and management has indicated that EV unit economics are improving and quarterly investments are coming down as scale builds.
To be sure, Hero does face a big risk from intensifying competition across scooters, EVs and premium motorcycles. If it can sustain its transition toward premiumization, electrification and exports; and execute well on EV scale-up while managing costs, future earnings growth is likely to be healthier and margin more durable than in the past. The Hero stock now trades at 20 times its FY27 estimated EPS (earnings per share), as per Bloombergwhich looks reasonable, provided the company is able to maintain the sales momentum once the GST-led benefits fade.
