Q1 2027 Hero MotoCorp Ltd Earnings Call

Speaker #1: Ladies and gentlemen, good day, and welcome to the Hero MotoCorp Q1 FY27 earnings conference call hosted by ACURAS Securities. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions.

Operator 2: Ladies and gentlemen, good day and welcome to the Hero MotoCorp Q1 and FY27 earnings conference call hosted by Equirus Securities. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Mihir Vora from Equirus Securities. Thank you, and over to you, Mihir.

Speaker #1: After the presentation concludes, should you need assistance in the conference call, please signal an operator by pressing star, then zero, on your touch control.

Speaker #1: I now hand the conference over to Mr. Meher Bora from ACURAS Securities. Thank you, and over to you, Meher.

Speaker #2: Yeah, thank you, Danish. Good morning, everyone. Welcome to the Q1 FY27 post-results conference call of Hero MotoCorp. I would like to thank the management team of Hero MotoCorp for giving us the opportunity to host this call.

Mihir Vora: Yeah. Thank you, Danish, and good morning, everyone. Welcome to the Q1 FY27 post-results conference call of Hero MotoCorp. I would like to thank the management team of Hero MotoCorp for giving us the opportunity to host this call. I'll now hand over the call to Sarthak from investor relations team of Hero to take this forward. Over to you, Sarthak.

Speaker #2: I'll now hand over the call to Sarthak from the Investor Relations team at Hero to take this forward. Over to you, Sarthak.

Speaker #3: Hi, thank you, Meher. Good morning, everyone, and welcome to our earnings call. With us on the call today, we have Mr. Harshvardhan Chitale, who's our CEO; Mr. Vivek Anand, our CFO; Mr. Ashtosh Verma, who is the Chief Business Officer of the India Business Unit; Mrs. Kausalya Nandkumar, Chief Business Officer of the Emerging Mobility Business Unit; and Mr. Anuj Dua, who is the Chief Business Officer of the Premium Business Unit.

Sarthak Sikka: Hi. Thank you, Mihir. Good morning, everyone, and welcome to our earnings call. With us on the call today, we have Mr. Harshavardhan Chitale, who's our CEO. Mr. Vivek Anand, our CFO, Mr. Ashutosh Varma, who is the Chief Business Officer of the India Business Unit, Ms. Kausalya Nandakumar, Chief Business Officer of the Emerging Mobility Business Unit, and Mr. Anuj Dua is the Chief Business Officer of Premium Business Unit. We'll begin the call with opening remarks from Harsh and Vivek, followed by a Q&A session. With that, let me hand over to Harsh.

Speaker #3: We'll begin the call with opening remarks from Harsh and Vivek, followed by a Q&A session. With that, let me hand over to Harsh.

Speaker #4: Thank you, Sarthak, and good morning, everyone. Thank you for joining us on this call today. I'm sure that all of you must have seen our results for Q1, fiscal year FY27.

Harshavardhan Chitale: Thank you, Sarthak, and good morning, everyone, and thank you for joining us on this call today. I'm sure that all of you must have seen our results for Q1 fiscal year FY27. Before we dive in to analyze our performance, I want to highlight that we have already uploaded a quarterly investor presentation on our website besides just the results. Those of you who want to refer to it, please feel free to do so. I and Vivek will also touch upon some of the key points that are highlighted there in that deck through this call. Let's begin with macro and industry trends. Starting first with the underlying demand trend in Q1 FY27. As you all noticed, we had a good tailwind and we had a good demand momentum throughout the quarter.

Speaker #4: Before we dive into analyzing our performance, I want to highlight that we have already uploaded a quarterly investor presentation on our website. Besides just the results, those of you who want to refer to it, please feel free to do so.

Speaker #4: Vivek and I will also touch upon some of the key points that are highlighted in that deck during this call. So let's begin with macro and industry trends.

Speaker #4: Starting first with the underlying demand trend in Q1 FY27. As you all noticed, we had a good tailwind, and we had strong demand momentum throughout the quarter.

Speaker #4: And two-wheeler industry volumes grew 14% year on year in terms of VAHAN or retail sales, of which 11% was growth in ICE and 67% was in EV.

Harshavardhan Chitale: Two-wheeler industry volumes grew 14% year-on-year in terms of vehicle or retail sales, of which 11% was growth in ICE and 67% was in EV. Both ICE and EV had strong demand momentum in Q1. This growth was broad-based, supported by improved affordability post GST rate cuts, as well as healthy urban and rural demand and continued acceleration in EV adoption. It's heartening to see that this strong demand momentum has continued in Q2, and Q2 also saw a strong retail growth, a year-on-year retail growth in July of 28%. Both ICE and EV again registered similar kind of strong momentum as we saw in Q1. Moving to operational performance of Hero MotoCorp in Q1. When you look at our dispatches, our volume grew at 23% year-on-year, and our revenue grew 36%.

Speaker #4: So both ICE and EV had strong demand momentum in quarter one. This growth was broad-based, supported by improved affordability post-GST rate cuts, as well as healthy urban and rural demand, and continued acceleration in EV adoption.

Speaker #4: It's heartening to see that this strong demand momentum has continued in Quarter 2, and Quarter 2 also saw a strong year-on-year retail growth in July of 28%.

Speaker #4: Both the ICE and EV again registered similar kinds of strong momentum as we saw in quarter one. Moving to operational performance of Hero MotoCorp in quarter one, when we look at our dispatches, our volume grew at 23% year-on-year.

Speaker #4: And our revenue grew 36%. So, this extra 13% uplift between 36% and 23% came from improved price realization as well as mix. For the last few quarters, we've been talking about our emphasis on growing in EV, growing in premium, growing in our global business, and growing in scooters. All of these four actually performed very well for us this quarter.

Harshavardhan Chitale: This extra 13% uplift between 36 and 23 came from improved price realization as well as mix. For last few quarters, we've been talking about our emphasis on growing in EV, growing in premium, growing in our global business, and growing in scooters. All of these four actually performed very well for us this quarter, and that contributed to positive of 8%. A lot of our growth now as well as going forward, you will see in revenue is on top of volume growth, which is contributed by increasing shift to these higher value products of scooter, premium, EV, and global businesses. Overall, we saw our discount or wholesale market share increase by 30 basis points in Q1. As I highlighted in the last quarter, our strategy of focusing on fast-growing segments continued to yield results. Besides, we consolidated our gains in the commuter segment.

Speaker #4: And that contributed to a positive of 8%. So, a lot of our growth now, as well as going forward, you will see in revenue is on top of volume growth, which is contributed by the increasing shift to these higher value products of scooter, premium, EV, and global. Our dispatch or wholesale market share increased by 30 basis points in Q1.

Speaker #4: And as I highlighted in the last quarter, our strategy of focusing on fast-growing segments continued to yield results as we consolidated our gains. Besides, we consolidated our gains in the commuter segment.

Speaker #4: ICE overall grew 21% year-on-year, with 18% growth in domestic volumes and 63% growth in global business. Within ICE scooters, we gained market share by 2.3%.

Harshavardhan Chitale: ICE overall grew 21% year-on-year, with 18% growth in domestic volumes and 63% growth in global business. Within ICE scooters, we gained market share by 2.3%. 230 basis points market share gain was in scooters alone. Now we have across close to 7% market share in ICE scooters. In EV, we have a wholesale growth of 151%, and this has helped us gain more than 400 basis points of market share within 1 year. Now we are consistently retailing at more than 20,000 units every month. You will see that going forward increasing as we have just now introduced two very exciting new products, and later on, Kausalya can speak more about that. We've also done the first leg of our capacity expansion, which has already come on stream on 1 August.

Speaker #4: So, a 230 basis point market share gain was in scooters alone. And now, we have close to 7% market share in ICE scooters. In EV, we had a wholesale growth of 151%.

Speaker #4: And this has helped us gain more than 400 basis points of market share year-on-year, within one year. Now, we are consistently retailing more than 20,000 units every month.

Speaker #4: And you will see that going forward, increasing as we have just now introduced two very exciting new products, and later on, Kausalya can speak more about that.

Speaker #4: And we've also done the first leg of our capacity expansion, which has already come on stream as of the 1st of August. So, both these new launches, as well as the additional capacity, will see a further boost to our EV sales going forward.

Harshavardhan Chitale: Both these new launches as well as additional capacity will see a further boost to our EV sales going forward. On global business, we expanded our market share by 110 basis points within the quarter. In Parts & Accessories business, which is a very profitable contributor to our financials, we saw strong growth of 30% year-on-year. Moving to some key new launches that we did in the quarter. We had number of launches in ICE. We saw a Super Splendor XTEC 2.0, which comes with a best-in-class mileage as well as a silent start. We also launched a Passion Plus Disc variant. Passion Plus Disc variant expands our 100cc portfolio. Then in July, you heard from us about new launches in VIDA, where we've now launched a premium variant of VIDA VX2.

Speaker #4: On global business, we expanded our market share by 110 basis points within the quarter. In the parts and accessories business, which is a very profitable contributor to our financials, we saw strong growth of 30% year-on-year.

Speaker #4: Moving to some key new launches that we did in the quarter, we had a number of launches in ICE. We saw a Super Splendor XT 2.0, which comes with best-in-class mileage as well as a silent start.

Speaker #4: We also launched a Passion Plus disc variant, both of which actually expanded our—so, the Passion Plus disc variant expands our 100cc portfolio.

Speaker #4: And then in July, you heard from us about new launches in Vira, where we've now launched a premium variant of Vira VX2. It gives 187 kilometers of IDC range.

Speaker #4: And also a superior fast-charging capability. And if you want to learn more about it, Kausalya is on the call to talk more about it later.

Harshavardhan Chitale: It gives 187 kilometers of IDC range and also a superior fast charging capability. If you want to learn more about it, Kausalya is on the call to talk more about it later. In terms of our technology advancements, we continue to do investments in new powertrains with our focus on future of mobility, lean mobility. Hence, you heard from us in June about our flex fuel range that we introduced. We are the first ones to have introduced, in the core commuter segment, flex fuel variants of our highest-selling models, Splendor and HF. With that variant, you can now have a motorcycle that is designed to operate all the way from 20% of ethanol content in the fuel all the way up to 85%. It comes with a smart engine technology as well as components specifically designed to work at higher blends of ethanol.

Speaker #4: In terms of our technology advancements, we continue to make investments in new powertrains, with our focus on the future of mobility and clean mobility. And hence, you heard from us in June about our flex fuel range that we introduced.

Speaker #4: We are the first ones to have introduced, in the core commuter segment, flex-fuel variants of our highest-selling models, Splendor and HF. And with that variant, you can now have a motorcycle that is designed to operate with anything from 20% ethanol content in the fuel all the way up to 85%.

Speaker #4: It comes with smart engine technology, as well as components specifically designed to work at higher blends of ethanol. We started dispatching those from the third week of July.

Harshavardhan Chitale: We started dispatching those from the third quarter of July, and it's very heartening to see that within two weeks, at the third week of July, and within two weeks, we've already sold close to 5,000 of these in few outlets where we've made these vehicles available. It's seeing a great traction, and we are the only ones, and we are differentiated in that category right now. We are also further advancing on our electric motorcycle range, and you should also hear more about that soon from us. Kausalya can also talk about it later. We continue to work on these future of mobility and clean mobility powertrains, and that remains our focus. Last quarter, we had also spoken about capacity expansion investments, and we made significant progress on that.

Speaker #4: And it's very heartening to see that within two weeks, as of the third week of July, we've already sold close to 5,000 of these in the few outlets where we've made these vehicles available.

Speaker #4: So, it's seeing great traction, and we are the only ones—and we are differentiated in that category right now. We are also further advancing on our electric motorcycle range.

Speaker #4: And you should also hear more about that soon from us. Kausalya can also talk about it later. So, we continue to work on these future mobility and clean mobility powertrains.

Speaker #4: And that remains our focus. Last quarter, we had also spoken about capacity expansion investments, and we made significant progress on that. When it comes to EV, you would recollect that we had ended last year with a monthly capacity of 15,000 units per month.

Harshavardhan Chitale: When it comes to EV, you would recollect that we had ended last year with a monthly capacity of 15,000 per month. As we stand today, in the first week of August, it has already increased to close to 30,000 per month, and you should see us go to close to 45,000 per month before end of this financial year. As we had committed, we are tripling our capacity of EVs within this financial year. We've also increased our capacity in Splendor. Looking at encouraged by the growth that we are seeing even in our Splendor, which grew 15% with year-on-year within the quarter. So we've added 2,000 per day of capacity in Splendor. We've doubled the capacity of Destini, and both of these have been completed within the quarter itself.

Speaker #4: As we stand today, in the first week of August, it has already increased to close to 30,000 per month. And you should see us go to close to 45,000 per month before the end of this financial year.

Speaker #4: So, as we had committed, we are tripling our capacity of EV within this financial year. We've also increased our capacity in Splendor, encouraged by the growth that we are seeing even in our Splendor, which grew 15% year-on-year within the quarter.

Speaker #4: So, we've added 2,000 per day of capacity in Splendor. We've doubled the capacity of Destiny, and both of these have been completed within the quarter itself.

Speaker #4: We are further increasing our capacity also in Zoom, which is a 50% further jump in the capacity of Zoom scooters. And this increase in Destini and increase in Zoom in our scooter range is coming from the confidence in the growth that we see in scooters.

Harshavardhan Chitale: We are further increasing our capacity also in XPulse, which is a 50% further jump in the capacity of XPulse scooters. This increase in Destini and increase in XPulse, our scooter range is coming from the confidence of growth that we've seen in scooters, where we almost doubled our dispatches in scooters year-on-year. We are seeing excellent traction in scooters and 230 basis points of share gain in scooters, hence these significant capacity enhancements in scooters. In May, we had talked about a new CTO who joined us, Sachin Agrawal. He joined us as the new CTO in May, and he comes with a background of multiple decades working on different powertrains, and that further bolsters our capability that we are building about our powertrain development. Just earlier this week, we announced Mr. Anuj Dua as the Chief Business Officer for premium segment.

Speaker #4: We almost doubled our dispatches in scooters year on year. So, we are seeing excellent traction in scooters and a 230 basis point share gain in scooters.

Speaker #4: Hence, these significant capacity enhancements in scooters. In May, we had talked about a new CTO who joined us, Sachin Agarwal. He joined us as the new CTO in May.

Speaker #4: And he comes with a background of multiple decades working on different powertrains, and that further bolsters our capability that we are building for our powertrain development.

Speaker #4: Just earlier this week, we announced Mr. Anush Dua as the Chief Business Officer for the premium segment. Anush brings over two decades of experience, with deep leadership expertise across different two-wheeler OEMs.

Harshavardhan Chitale: Anuj brings over 2 decades of experience, with deep leadership experience across different two-wheeler OEMs. He has a proven track record across global product strategy, brand building, market expansion across different geographies. He's on the call with us today. Before I hand over the floor to Vivek, I would request Anuj to introduce himself and maybe talk about some of his immediate priorities. Anuj, all the best, and over to you.

Speaker #4: And he has a proven track record across global product strategy, brand building, and market expansion across different geographies. He's on the call with us today. Before I hand over the floor to Vivek, I would request Anush to introduce himself and maybe talk about some of his immediate priorities.

Speaker #4: Anush, all the best, and over to you.

Speaker #2: Thank you, Anush. Thank you very much. Good morning, everyone. Once again, I would like to begin by expressing my sincere thanks to Harsh and Dr. Munjal for trusting me to lead this premium business unit.

Anuj Dua: Thank you, Harsh. Thank you very much. Good morning, everyone, once again. I would like to begin with expressing my huge thanks to Harsh and Dr. Munjal for trusting me to lead this premium business unit. That's our next big growth engine. All of us are fully aware of this. I'm personally very excited about leading this business unit. Motorcycling for me is a hobby and passion, not just a job. Thank you once again, Harsh. Since I'm interacting with all of you for the first time, I would like to just quickly share my background. I joined one year back leading the products, and now I've been given this new assignment. Prior to this, for nine years, I was working with Royal Enfield. Prior to that, for 10 years, I was working with Hero.

Speaker #2: That's our next big growth engine. All of us are fully aware of this. I'm personally very excited about leading this business unit. Motorcycling, for me, is a hobby and passion—not just a job.

Speaker #2: So, thank you once again, Harsh. Since I am interacting with all of you for the first time, I would like to just quickly share my background.

Speaker #2: I joined one year back, leading the products, and now I've been given this new assignment. Prior to this, for nine years, I was working with Valenfield.

Speaker #2: Prior to that, for 10 years, I was working with Hero. So, all these two journeys across Hero and Valenfield were across sales, marketing, and product planning.

Anuj Dua: All these two journeys across Hero and Royal Enfield was across sales, marketing, product planning. It has given me immense learning from interacting with all my colleagues in plant, sourcing, manufacturing, R&D, across sales and marketing. One thing which has remained very common and permanent was focus on consumers and what they would love to see in the motorcycles. I've enjoyed creating the product experiences, engagements, in motorcycling in a few parts of the world in Asia Pacific and specifically in India. My mandate from Harsh is very clear. Focus on consumer and community. Do exactly what they need in product, in engagement, in experiences. I think that's amongst the few priorities that Harsh wanted me to speak about. The first priority remains to elevate the consumer retail experience across all touch points.

Speaker #2: It has given me immense learning from interacting with all my colleagues in plant, sourcing, manufacturing, R&D, across sales and marketing. So, one thing which has remained very common and permanent was the focus on consumers and what they would love to see in the motorcycles.

Speaker #2: I've enjoyed creating the product, experiences, and engagements in motorcycling in a few parts of the world, in Asia Pacific, and specifically in India. My mandate from Harsh is very clear.

Speaker #2: Focus on consumer and community. Do exactly what they need in product, in engagement, in experiences. So, I think that's among the few priorities that Harsh wanted me to speak about.

Speaker #2: The first priority remains to elevate the consumer retail experience across all touch points. From the search journey to the in-use journey—everywhere, wherever they interact with us—they should feel elated and get a premium feel.

Anuj Dua: From a search journey to in-use journey, everywhere, wherever they interact with us, they should feel elated and get a premium feel. The next important priority will be portfolio expansion. There are interesting, very exciting products coming over in the next 12 months. That's where we'll focus a lot. I would also love to focus on merchandise and accessories. Across the globe now, mass customization, mass personalization is a trend across categories and more so in two-wheeler. That's where merchandise and accessories play a very important role in uplifting the lifestyle association and not just the business. We have an amazing partnership with the OG brand, Harley-Davidson. We will take it to the next level. Community and lifestyle engagement, that's where the two-wheeler riders all over the globe are feeling more and more involved. That's where we'll focus a lot.

Speaker #2: The next important priority will be portfolio expansion. There are interesting, very, very exciting products coming over in the next 12 months. That's where we'll focus a lot.

Speaker #2: I would also love to focus on merchandise and accessories. Across the globe now, mass customization and mass personalization are trends across categories, and more so in two-wheelers.

Speaker #2: That's where merchandise and accessories play a very important role in uplifting the lifestyle association and not just the business. We have an amazing partnership with the OG brand, Harley-Davidson.

Speaker #2: We will take it to the next level. Community and lifestyle engagement—that's where two-wheeler riders all over the globe are feeling more and more involved.

Speaker #2: That's where we'll focus a lot. Our huge investments in terms of the right bandwidth in motorsports are already paying us huge dividends across the globe, specifically in India and Latin America.

Anuj Dua: Our huge investments in terms of the right bandwidth in motorsports is already paying us huge dividends across the globe, specifically in India and Latin America. We'll make sure we make the motorsports fully accessible to the motorcycle enthusiasts, and this adventure segment is the fastest-growing segment across the world, and Hero through Dakar and motorsports efforts has been seen as a clear winner in that mind space. We will make sure we do that more and more now. In the end, I would also like to say that, not now, maybe in the future, whenever Vivek, Sarthak feel, we should ride with some of you and let's catch up for riding motorcycles, not just on the calls like this. Looking forward to that, and maybe Sarthak can help us do that. Thank you very much once again, and over to Vivek.

Speaker #2: We'll make sure we make motorsports fully accessible to motorcycle enthusiasts. And this adventure segment is the fastest-growing segment across the world.

Speaker #2: And Hero, through Dakar and motorsports efforts, has been seen as a clear winner in that mind space. So we will make sure we do that more and more now.

Speaker #2: In the end, I would also like to say that, if not now, maybe in the future, whenever Vivek Sahay feels, we should ride with some of you. Let's catch up for a motorcycle ride, not just on calls like this.

Speaker #2: So, looking forward to that, and maybe Satak can help us do that. Thank you very much once again, and over to Vivek.

Speaker #1: Yep. Thank you, Anush. And good morning, everyone. A very warm welcome to all joining us on the call today. I hope you have all had the opportunity to review our financial results for the first quarter of fiscal year 2027.

Harshavardhan Chitale: Yep.

Vivek Anand: Thank you, Anuj, and good morning, everyone. A very warm welcome to all joining us on the call today. I hope you have all had the opportunity to review our financial results for the first quarter of fiscal year 2027. Turning straight to our financial performance for Q1, FY27, we delivered a strong quarter on the top line, recording revenue from operations of INR 12,999 crores and a EBITDA of INR 1,727 crores and a profit after tax of INR 1,454 crores. Total volume grew by a robust 23% year-on-year. This was backed by steady 21% growth in our core ICE portfolio and a strong 151% growth in our EV business, reflecting both healthy underlying market demand and growing customer preference for our new launches. What is particularly encouraging is that our revenue growth outpaced volume growth significantly, coming in at 36% year-on-year.

Speaker #1: Turning straight to our financial performance for quarter one, financial year '27, we delivered a strong quarter on the top line, recording revenue from operations of ₹12,999 crore.

Speaker #1: And EBITDA of ₹1,727 crores, and profit after tax of ₹1,454 crores. Total volume grew by a robust 23% year-on-year. This was backed by steady 21% growth in our core ICE portfolio.

Speaker #1: And a strong 151% growth in our EV business, reflecting both healthy underlying market demand and growing customer preference for our new launches. What is particularly encouraging is that our revenue growth outpaced volume growth significantly, coming in at 36% year on year.

Speaker #1: This top-line expansion was driven by premiumization across our portfolio, driven by a shift in mix towards EV, scooters, and premium variants. Contribution contributed a mix benefit of 8%, with the rest coming from calibrated price increases.

Vivek Anand: This top-line expansion was driven by premiumization across our portfolio, driven by a shift in mix towards EV, scooters, and premium variants, contributing a mixed benefit of 8%, with the rest coming from calibrated price increase. Notably, this includes strong growth in our parts business of over 30% through a healthy mix of volume expansion and price. Now, as we flagged during our last earnings call, Q1 did experience transitionary commodity cost pressures. The conflict in West Asia triggered inflationary spikes across oil and gas, freight, foreign exchange, and core raw materials, including steel, aluminum, and precious metals. Because of this, our gross margin for the quarter came down under pressure, contracting 300 basis points quarter-on-quarter, primarily due to an approximate 4.5% net commodity inflation impact. Recognizing these headwinds risk early, we moved quickly and decisively.

Speaker #1: Notably, this includes strong growth in our parts business of over 30%, through a healthy mix of volume expansion and price. Now, as we flagged during our last earnings call, Q1 did experience transitionary commodity cost pressures.

Speaker #1: The conflict in West Asia triggered inflationary spikes across oil and gas, freight, foreign exchange, and core raw materials including steel, aluminum, and precious metals.

Speaker #1: Because of this, our gross margin for the quarter came down under pressure, contracting 300 basis points quarter-on-quarter, primarily due to an approximate 4.5% net commodity inflation impact.

Speaker #1: Recognizing these headwinds early, we moved quickly and decisively. There are a couple of initiatives that I would like to briefly talk about.

Speaker #1: We've taken during the quarter. Firstly, we improved mix, driven by a higher contribution from premium variants and PAM business. Second, we rationalized our cost structures by deferring non-critical operating expenses and accelerating cost savings under our internal LEAP program.

Vivek Anand: There are a couple of initiatives what I would like to briefly talk about we've taken during the quarter. Firstly, we improved mix driven by a higher contribution from premium variants and P&A business. Second, we rationalized our cost structures by deferring non-critical operating expenses and accelerating cost savings under our internal LEAP program. We leveraged our operating scale to drive cost efficiencies across manufacturing and supply chain operations. Finally, we took judicious price actions across select models, balancing margin protection with market momentum. As a direct result of these initiatives, even with a gross margin contraction of 300 basis points quarter-on-quarter, our overall EBITDA margin decline was lower at 120 basis points sequentially, landing at 13.3%. Thanks to the disciplined cost management, as reflected in a 14% sequential reduction in other expenses.

Speaker #1: We leveraged our operating scale to drive cost efficiencies across manufacturing and supply chain operations. And finally, we took judicious price actions across select models, balancing margin protection with market momentum.

Speaker #1: As a direct result of these initiatives, even with a gross margin contraction of 300 basis points quarter on quarter, our overall EBITDA margin decline was lower at 120 basis points sequentially, landing at 13.3%.

Speaker #1: Thanks to disciplined cost management, as reflected in a 14% sequential reduction in other expenses. Looking specifically at our ICE portfolio, EBITDA margins held up even better, contracting by 90 basis points sequentially to 15.9%, cushioned by strong operating leverage, cost savings, and higher profitability in our parts business.

Vivek Anand: Looking specifically at our ICE portfolio, EBITDA margins held up even better, contracting by 90 basis points sequentially to 15.9%, cushioned by strong operating leverage, cost savings, and higher profitability in our parts business. Amid these short-term cost pressures, we chose not to compromise on our long-term growth priorities. We continued to invest aggressively behind brand building and strategic product launches. During the quarter, we launched two new EV products and rolled out high impact global marketing campaigns across major events like the FIFA World Cup and the India-England Cricket series, creating strong visibility across key brands including Xtreme, Destini, Xoom, and Xpulse. In our EV business, Vida achieved strong growth, with quarterly volume reaching 57,000 units, up 26% quarter-on-quarter. Importantly, our total P&L investment in the Vida business remained flat sequentially at around INR 230 crores.

Speaker #1: Amid these short-term cost pressures, we chose not to compromise on our long-term growth priorities. We continue to invest aggressively in brand building and strategic product launches.

Speaker #1: During the quarter, we launched two new EV products and rolled out high-impact global marketing campaigns across major events like the FIFA World Cup and the India-England cricket series, creating strong visibility across key brands including Extreme, Destiny, Zoom, and Xpulse.

Speaker #1: In our EV business, we've achieved strong growth, with quarterly volume reaching 57,000 units, up 26% quarter-on-quarter. Importantly, our total P&L investment in the VIDA business remained flat sequentially at around ₹230 crore.

Speaker #1: This disciplined cost profile was made possible by continuous improvement in per unit economics, targeted pricing actions, and PLI benefit amounting to ₹48 crore during the quarter.

Vivek Anand: This disciplined cost profile was made possible by continuous improvement in per unit economics, targeting pricing actions, and PLI benefit amounting to INR 48 crores during the quarter. On the PLI front, I am pleased to share that around 60% of our EV portfolio is now PLI certified, and we expect 100% of our portfolio to be PLI compliant by December 2026. Financial year 2027 will be our first full year of PLI accruals, providing a strong structural tailwind to support EV portfolio. Moreover, some of our models have turned gross margin positive, which will further enhance our overall EV profitability going forward. Moving on to the consolidated results, company PAT of INR 1,418 crores versus normalized profit of around INR 1,100 crores last year.

Speaker #1: On the PLI front, I'm pleased to share that around 60% of our EV portfolio is now P&I certified. We expect 100% of our portfolio to be PLI compliant by December 2026.

Speaker #1: Financial year '27 will be our first full year of PLI accruals, providing a strong structural trade wind to support the EV portfolio. Moreover, some of our models have turned gross margin positive, which will further enhance our overall EV profitability going forward.

Speaker #1: Moving on to the consolidated results, company PAT of ₹1,480.18 crores versus normalized profit of around ₹1,100 crores last year. It is important to note that last year we had a one-time gain of approximately ₹700 crores before tax on account of dilution of company shares of investment in associates consequent to public issue and private placement.

Vivek Anand: It is important to note that last year we had a one-time gain of approximately INR 700 crores before tax on account of dilution of company shares of investment in associates consequent to public issue and private placement. Looking ahead to Q2 FY27, while we expect a marginal uptick in input cost inflation, we plan to neutralize by continued improvement of product mix, optimizing our discretionary spends, and accelerating cost-saving programs. Our primary focus will remain on driving EBITDA growth while progressing towards our medium-term EBITDA margin target range of 14% to 16%. Going forward, our journey of investment behind growth will continue, both in terms of capacity expansion and brand building to support our premium scooters, EV, and global business portfolio. Thank you once again for your time and continued support. On that note, let me open the floor for Q&A. Over to you, Sarthak. Thank you.

Speaker #1: Looking ahead to Q2, financial year '27, while we expect a marginal uptick in input cost inflation, we plan to neutralize it by continued improvement of product mix, optimizing our discretionary spends, and accelerating cost saving programs.

Speaker #1: Our primary focus will remain on driving EBITDA growth while progressing towards our medium-term EBITDA margin target range of 14% to 16%. Going forward, our journey of investment behind growth will continue, both in terms of capacity expansion and brand building, to support our premium scooters, EV, and global business portfolio.

Speaker #1: Thank you once again for your time and continued support. On that note, let me open the floor for Q&A. Over to you, Sarthak. Thank you.

Speaker #2: Thank you. Danish, we can open the line for questions.

Speaker #3: Sure. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Sarthak Sikka: Thank you. Danish. We can open the line for questions.

Operator 2: Sure. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Amyn Pirani with JP Morgan. Please go ahead.

Speaker #3: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question.

Speaker #3: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question comes from the line of Amin Pirani with J.P. Morgan.

Speaker #3: Please go ahead.

Speaker #2: Yes, hi. Thanks for the opportunity, and congratulations on a very strong performance in a very tough quarter for the auto industry. My first question was actually on the scooter and EV capacity expansion, as well as the model launches that you have done in the last few weeks.

Amyn Pirani: Yes. Hi. Thanks for the opportunity, and congratulations on a very strong performance in a very tough quarter for the auto industry. My first question was actually on the scooter and EV capacity expansion, as well as the model launches that you have done in the last few weeks. Any initial sense of demand on the ground? Are there any order books? Is there low inventory levels for these models? Because we are going to expand capacity quite rapidly. Historically, you were mentioning that you were supply constrained. Any extra color there would be quite helpful.

Speaker #2: So, any initial sense of, you know, demand on the ground? You know, are there any order books? Is there, you know, low inventory levels for these models?

Speaker #2: Because we are going to expand capacity quite rapidly, and historically, you were mentioning that you were supply constrained, so any extra color there would be quite helpful.

Speaker #1: No, thank you, Amin. Thank you for your question. So let's begin with VIDA on EV. We have pretty much nil channel inventory—you know, it's two to three days depending on region to region.

Harshavardhan Chitale: Thank you, Amyn. Thank you for your question. Let's begin with Vida on EV. We have pretty much nil channel inventory. It is 2 to 3 days depending on region to region. Whatever we are supplying and shipping is actually retailed immediately. That gives you an indication of the pent-up demand. As we now bring on 10,000 more capacity right away this month, we expect there is the demand there, which will immediately pick that up. Coming to ICE scooters. As you saw, we had an 87% growth year-on-year in our ICE scooters as well. There, when I look at the channel stock of Xoom, for example, or some variants of Destini, those are running into typically half of what on an average we normally see in all our models. There is also a bit of a depletion of channel stock there.

Speaker #1: So whatever we are supplying and shipping is actually retailed immediately. So that gives you an indication of the pent-up demand. So, as we now bring on 10,000 more capacity right away this month, I mean, we expect there is the demand there which will immediately pick that up.

Speaker #1: Coming to ICE scooters, as you saw, we had an 87% growth year-on-year in our ICE scooters as well. And there, when I look at the channel stock of Zoom, for example, or some variants of Destiny, those are running at typically half of what, on average, we normally see in all our models.

Speaker #1: So there is also a bit of a depletion of channel stock there. And hence, between VIDA and between all the scooters put together, we've added close to 2,500 per day of extra capacity.

Harshavardhan Chitale: Hence, between VIDA and between all the scooters put together, we've added close to 2,500 per day of extra capacity.

Speaker #2: Okay, that’s really great to know, and I’m looking forward to the ramp-up of wholesales and retail here. My second question is on motorcycles.

Amyn Pirani: Okay. That's really great to know and looking forward to the ramp-up of the wholesales and retails here. My second question is on motorcycles. If you look at motorcycles, it looks like especially the bottom half, which is up to 125cc, as a category, is still not doing as well as the other categories within two-wheelers despite GST. You have gained share within the 100cc clearly. The category doesn't seem to be doing that well. Any color there, any insights as to what is going on and what we can expect over the next few quarters?

Speaker #2: Now, if you look at motorcycles, it looks like especially the bottom half, which is, you know, up to 125 cc as a category, is still not doing as well as, you know, the other categories within two-wheelers, despite GST.

Speaker #2: You have gained share within the 100cc, clearly, but the category doesn't seem to be doing that well. So, any, you know, color there? Any insights as to what is going on and what we can expect over the next few quarters?

Speaker #1: No, I think that's a great observation. Yes, within the motorcycle category—by the way, the 100cc category is also growing, but the other ranges, 125cc and above, are growing faster.

Harshavardhan Chitale: No, I think a great observation. Yes, within the motorcycle, by the way, the category 100cc is also growing, but other ranges, 125cc and above, are growing faster. The 100cc, we have outgrown the industry and hence gained 230 basis points of market share. We are now at close to 86% market share.

Speaker #1: And, in the 100cc segment, we have outgrown the industry and hence gained 230 basis points of market share. So we are now at close to 86% market share.

Speaker #1: So, already from a high, we have further gained market share there. But that category in itself is also growing. So, that's heartening because the tailwind out of GST, creating more affordability, still continues.

Amyn Pirani: Yeah.

Harshavardhan Chitale: Already from a high, we have further gained market share there. That category in itself is also growing. That's heartening because the tailwind out of GST creating more affordability, that still continues. This is still the bike, the first commuter purchase that many of our customers do as they get into the market. The higher categories, of course, as India urbanizes, India becomes richer, those categories are growing faster, and you saw us gain share in those as well.

Speaker #1: And this is still the bike—the first, first commuter purchase that many of our customers do as they get into the market. The higher categories, of course, as India urbanizes, as India becomes richer, those categories are growing faster, and you saw us gain share in those as well.

Speaker #2: Okay, understood. Thanks for this. I'll come back in the queue.

Amyn Pirani: Okay. Understood. Thanks for this. I'll come back in the queue.

Speaker #3: Thank you. Our next question comes from the line of Kunjan Prityani with Bank of America. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Gunjan Prithyani with Bank of America. Please go ahead.

Speaker #4: Yeah, hi. Thanks for taking my questions. My first question is just a clarification on the 2,500 capacity per day that you mentioned. Is my understanding right that we're roughly doing about 60,000 to 65,000 right now, put together—ICE and EVs—and this will pretty much double by the second half of the year?

Gunjan Prithyani: Yeah. Hi, thanks for taking my questions. My first question is just a clarification on the 2,500 capacity per day that you mentioned. Is the understanding right that we're roughly doing about 60,000, 65,000 right now, put together ICE and EVs. This will pretty much double by H2. Is there any timeline? Is the understanding on the number correct on monthly basis?

Speaker #4: Is there any timeline, and is the understanding of the number correct on a monthly basis?

Speaker #1: No, you're right. I think we are, right now, clocking 65,000 a month—very accurate, in fact. And the capacity addition will be a little more than double.

Harshavardhan Chitale: You're right. I think we are right now clocking 65,000 a month. Very accurate, in fact. The capacity addition will little more than double.

Speaker #4: Okay. And is there any timeline? When do we reach this capacity? Is it by the end of the fourth quarter of fiscal 2027?

Gunjan Prithyani: Okay.

Harshavardhan Chitale: 2,000-

Gunjan Prithyani: Any timeline? When do we get to this capacity? Is it by the exit quarter of fiscal '27? Any timelines around the expansion?

Speaker #4: Any timelines around the, the expansion?

Speaker #1: So, two-thirds of this is already done, and it's the balance one-third. The second phase of expansion of VIDA, which will come in the last quarter of this financial year.

Harshavardhan Chitale: Two-third of this is already done. The balance one-third, the second phase of expansion of Veera, which will come in the Q4 of this financial year.

Speaker #4: And we do have that reasonable visibility on demand to be able to ramp it up pretty immediately in terms of production.

Gunjan Prithyani: We do have that reasonable visibility on demand to be able to ramp it up pretty immediately in terms of production.

Speaker #1: That is right. And that is, for the earlier question, which was on the channel stock and underlying demand, in each of these models we actually have much lower channel stock than what one would normally like to have.

Harshavardhan Chitale: That is right. The earlier question, which was on the channel stock and underlying demand.

Gunjan Prithyani: Yeah.

Harshavardhan Chitale: In each of these models, we actually have much lower channel stock than what one would normally like to have.

Speaker #4: Got it. No, that's good to hear. My, my question essentially is just, you know, shifting gears to the, the, the motorcycle business. I think we did take a pretty, you know, back-to-back price increases in quarter four and quarter one.

Gunjan Prithyani: Got it. That's good to hear. My question essentially is just shifting gears to the motorcycle business. I think we did take a pretty back-to-back price increases in Q4 and Q1. Just trying to maybe hear from management on what has been the acceptance of these price hikes and, given this also came along with the fuel price inflation that we saw. How has customer been able to take this sort of inflation? Is there something that we are thinking through in terms of getting the growth? We did see that immediate tailwind in the entry segment when the GST rate cut happened. That seems to be, again, stabilizing now for some reason. If you can share your thoughts. Is it because of the price increases there's been some impact on the demand? Your thoughts on the whole total cost of ownership acceptance at the entry end.

Speaker #4: Just trying to, you know, maybe hear from Ashutosh on what has been the acceptance of these price hikes and, you know, given this also came along with the fuel price inflation that we saw.

Speaker #4: So, you know, how has the customer been able to take this sort of inflation, and is there something that, you know, we are sort of thinking through in terms of getting the growth?

Speaker #4: You know, we did see that immediate tailwind in the entry segment when the GST rate cut happened. That seems to be again stabilizing now for some reason. If you can share your thoughts—is it because of the price increases? Has there been some, you know, some impact on the demand, or your thoughts on the whole total cost of ownership acceptance at the entry end?

Speaker #5: Sure. Kunjan, thank you for your question. I mean, I'll start off from where Harsh left. In fact, first of all, thanking the customers.

Ashutosh Varma: Sure, Gunjan. Thank you for your question. I'll start off from where Harsh left. In fact, first of all, thanking the customers that in the overall 100 cc, our market share now is 86%. Effectively, nine out of every 10 customers are preferring Hero for the values that we stand for, which is mileage, reliability, and trust. This is a category that we have owned. If you look at specifically 100 cc, the likes of Splendor and Passion, there we have seen category expansion, and there we have seen market share expansion. This segment growing from 32% to almost 33%, a little more. Market share went up by almost 3%. We have seen a lot of excitement. That's also because of the fact that we have continued to make interventions beyond the product itself. There have been interventions in terms of retail finance.

Speaker #5: That in the overall 100cc segment, our market share now is 86% effectively. Nine out of every ten customers are preferring Hero for the values that we stand for, which are mileage, reliability, and trust.

Speaker #5: So, this is a category that we have owned in. If you look specifically at 100cc, the likes of Splendor and Passion, there we've seen category expansion and there we have seen market share expansion.

Speaker #5: So, and in this segment, growing from 32% to almost 33%, a little more, market share went up by almost 3%. So, we have seen a lot of excitement; that's also because of the fact that we have continued to make interventions.

Speaker #5: Beyond the product itself, there have been interventions in terms of retail finance. There have also been interventions in terms of some of the other affordability measures that we have tried to implement.

Ashutosh Varma: There have been interventions in terms of some of the other affordability measures that we have tried to do. We are confident that this segment is resilient, as the way things look like from a monsoon perspective. The quarter and possibly leading into festive is looking much stronger. We expect this segment to do even better. Yes, we have taken some price increases, but that's also largely because of the confidence that we have in the brands that we feel that it will be able to continue to demand that kind of traction from consumers, and the growth in terms of market share is a testimony of that. Confident at that end. I hope I answered your question.

Speaker #5: So, we are, confident that this segment, is go is resilient. as the way, things look like, from, from a monsoon perspective, it's, it's, it's looking the quarter and possibly the leading into festives looking much segment to, to be to do even better.

Speaker #5: Yes, we've taken some price increases, but that's also largely because of the confidence that we have in the brands; we feel that they'll be able to continue to demand that kind of traction from consumers. The growth in terms of market share is a testimony to that, so.

Speaker #5: So confident, at that end. I hope I answered your question.

Speaker #4: Okay, okay, no, that's helpful. And maybe if I can just get the channel stock that's there on the bikes portfolio. You know, scooters numbers are very clear.

Gunjan Prithyani: Okay. That's helpful. Maybe if I can just get the channel stock that's there on the bikes portfolio. Scooter numbers are very clear. The financing penetration, if there is any significant change there.

Speaker #4: And the financing penetration—if there is any significant change there.

Speaker #5: So, six weeks—that's what we do. And, I mean, all this inventory is forward-looking. So, of course, we are not nearly there in terms of where we want to be with stocks, and over the next couple of months you would see some increase that we will have to do to be ready for the festive.

Ashutosh Varma: 6 weeks is what we do, and all this inventory is forward-looking. Of course, we are nearly not there in terms of where we want to be in terms of stocks. Over the next couple of months, you would see some increase that we will have to do to be ready for the festive. Progressing in the right direction. From a retail finance perspective, we saw the quarter becoming stronger. We have seen our retail finance penetration last month jumping to close to 65% odd. That's strong. There has been easing out in terms of credit, and that has started helping the markets. We believe that as we move into festive, this will become even more helpful.

Speaker #5: So, progressing in the right direction. From a retail finance perspective, we saw the quarter becoming stronger. We have seen our retail finance penetration last month jumping to close to 65-odd percent.

Speaker #5: And that's strong. There has been easing out in terms of credit, and that has started helping the markets. We believe that as we move into the festive season, this will become even more helpful.

Speaker #4: Got it. All right, thank you. I'll join back with you.

Speaker #3: Thank you. Our next question comes from the line of Binay Singh with Morgan Stanley. Please go ahead.

Gunjan Prithyani: Got it. All right. Thank you. I'll join back the queue.

Operator 2: Thank you. Our next question comes from the line of Binay Singh with Morgan Stanley. Please go ahead.

Speaker #6: Hi Deepa. Thanks for the opportunity. The first question is on the margin front. Looking at Q1, we had earlier talked about the 14 to 16% range.

Binay Singh: Hi, team. Thanks for the opportunity. The first question is on the margin front. Looking at Q1, we earlier talked about the 14% to 16% range. Do you think considering cost pressures, you will be able to maintain that range for the year?

Speaker #6: Do you think, considering cost pressures, you'll be able to maintain that range for the year?

Speaker #1: So, as we indicated, 14% to 16% is our guidance for the midterm. Last quarter, we indicated that with this transitory commodity price inflation, there would be some impact on the margin percent.

Harshavardhan Chitale: As we indicated, 14% to 16% is our guidance for the midterm. Last quarter, we indicated that with this transitory commodity inflation, there would be some impact in the margin percent. However, our focus would be to mitigate that through volume and focus on absolute EBITDA growth and not just EBITDA percent. In the midterm, we are confident of going back to it, but not in the short term.

Speaker #1: However, our focus would be to mitigate that through volume and focus on absolute EBITDA growth, and not just EBITDA percent. So, in the midterm, we are confident of going back to it, but not in the short term.

Speaker #6: Yeah. Yeah. Yeah. Hi Binay, Vivek here. Just to add, I think, clearly when we look ahead to the current quarter, which is Q2, financial year '27, we expect a marginal uptick in input cost inflation.

Binay Singh: Yeah.

Vivek Anand: Yeah. Hi, Binay. Vivek here. Just to add, I think, clearly when we look ahead to the current quarter, which is Q2, FY27, we expect a marginal uptick in input cost inflation. As I said earlier, we plan to neutralize this by continued improvement of product mix, optimizing our discretionary spends, and accelerating cost-saving programs. Our primary focus, as Harsh said, will remain on driving EBITDA growth while progressing towards our medium-term EBITDA margin target range of 14% to 16%.

Speaker #6: Right? As I said earlier, we plan to neutralize this by continuing to improve our product mix, optimizing our discretionary spending, and accelerating cost-saving programs.

Speaker #6: So, our primary focus, as Harsh said, will remain on driving EBITDA growth while progressing towards our medium-term EBITDA margin target range of 14% to 16%.

Speaker #6: Thanks, thanks. And secondly, Deepa, I'd like to share—just to get a sense on the ICE capacity. Like the EV capacity, we talked about 15,000 in Q1, 30,000 now, going to 45,000.

Binay Singh: Thanks. Secondly, team, like we shared, just to get a sense on the ICE capacity, like the EV capacity we talked about 15,000 Q1, 30,000 now, going to 45,000. What exactly is the ICE capacity now versus what you see into the festive season? What is the delta change in ICE capacity in the scooter side?

Speaker #6: So what exactly is the ICE capacity now versus what you see into the festive season? What is the delta change in ICE capacity on the scooter side?

Speaker #1: Yeah. So ICE capacity increases both on motorcycle and scooter. I also talked about increasing Splendor capacity by 2,000 per day, so almost 50,000 a month—a little over 50,000 a month—of increase in Splendor capacity.

Harshavardhan Chitale: Yeah. ICE capacity increases both on motorcycle and scooter. I also talked of increasing Splendor capacity by 2,000 per day. Almost 50,000 a month. A little over 50,000 a month of increase in Splendor capacity. That's a capacity increase that has already happened to prepare us well for festival season. Also on the ICE scooter front, we've added 1,500 per day. Which is also done. That is also done. Then first phase of VIDA is done, and the last phase will happen in Q4.

Speaker #1: So that's capacity increase that has already happened to prepare us well for the festival season. Also, on the ICE scooter front, we've added 1,500 per day.

Speaker #1: So, which is also done. So, that is also done. And then the first phase of Veda is done, and the last phase will happen in Q4.

Speaker #6: Excellent. And lastly, just on the EV launches that you talked about, the two variants that came up—could you share as to how they would contribute to the portfolio?

Binay Singh: Right. Lastly, just on the EV launches that you talked about, the two variants that came up. Could you share as to how would they contribute to the portfolio?

Speaker #1: Yeah. Kausalya, over to you.

Speaker #7: Yeah. Hi Binay. Good morning. We launched two variants in the first quarter, and one recently, of the two. The first variant is our long-range variant.

Harshavardhan Chitale: Yeah, Kausalya, over to you.

Kausalya Nandakumar: Yeah. Hi, Binay. Good morning. We launched two variants in Q1, and one recently, of the two. The first variant is our long-range variant. It's called the VX2 Plus 4.4 kilowatt, with an IDC range of 187 km. We launched it with a campaign called, "Hafte Mein Bas Ek Bar," because the unmatched range that we give allows consumers the flexibility to take charge at just once a week if they so desire. This also comes with a twin removable battery, giving the flexibility to consumers to charge everywhere. We've just started to dispatch in the quarter, and we have crossed about 1,000 vehicle dispatch, and are now looking at an uptick on the contribution of this product. The second product that we launched in August, actually, the variant, it's called the VX2 Go 3.1 kilowatt hour, and this offers an IDC range of about 120 km.

Speaker #7: It's called the VX2 Plus 4.4 kilowatt, with an IDC range of 187 kilometers. We launched it with a campaign called 'Hafte Mein Bas Ek Bar' because the unmatched range that we give allows consumers the flexibility to take charge just once a week, if they so desire.

Speaker #7: This also comes with the twin removable battery, giving flexibility to consumers to charge everywhere. We've just started de-dispatch in the quarter, and we have crossed about 1,000 vehicle dispatches and are now looking at an uptick in the contribution of this product.

Speaker #7: The second product that we launched, in August actually—the variant—it's called the VX2 Go 3.1 kilowatt-hour. And this offers an IDC range of about 120.

Speaker #7: And this particular product is catering to a set of consumers who are looking at a product for which they have access to charging at their home and office in a more easy manner.

Kausalya Nandakumar: This particular product is catering to a set of consumers who are looking at a product which they have access to charging at their home and office in a more easy manner. It comes with a strong backing of the styling that the VX2 already enjoys, the very favorable styling. Both of these products will contribute a significant volume going forward. As they stabilize in the forthcoming quarters, we'll share a little bit more in how they are actually blending in. We are very optimistic with our Ghar Ghar Evooter. Now with VIDA, we have a range from the 2.2 kilowatt all the way up to the 4.4 kilowatt, allowing consumers complete flexibility of options.

Speaker #7: It comes with a strong backing of the styling that the VX2 already enjoys—the very favorable styling. Both of these products will contribute a significant volume going forward.

Speaker #7: As they stabilize in the forthcoming quarters, we'll share a little bit more on how they are actually blending in. But we are very optimistic with our GharGhar E-Voter, now with Veda.

Speaker #7: We have a range from the 2.2-kilowatt all the way up to the 4.4-kilowatt, allowing consumers complete flexibility of options.

Speaker #6: Great. Great. Thanks, Deepa.

Harshavardhan Chitale: Great. Thanks, team.

Speaker #3: Thank you. Our next question comes from the line of Pramod Kumar with UBS. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Pramod Kumar with UBS Securities. Please go ahead.

Speaker #5: Yeah, thanks a lot for the opportunity. And before the question, Harsh, I think congratulations are in order for doing the right thing by the customer in terms of revising the HF Deluxe portfolio pricing.

Pramod Kumar: Yeah. Thanks a lot for the opportunity. Before the question, Harsh, I think congratulations for doing the right thing by the customer in terms of revising the HF Deluxe portfolio pricing. My first question is related to that segment again. Given that how dominant your market share is, near monopoly, how do you see this pricing action? If you can help us put this in context as to with the price revision what you have done, where has the pricing gone to, and what is the expected impact on demand, or what it could do to revive the category? Because this category is the only one which is kind of holding you back on market share, or pushing you back.

Speaker #5: and my first question is related to that segment again. given that how dominant your market is near monopoly, how do you see this pricing action, if you can help us put this in context as to with the price revisions what you have done, whereas the pricing gone to and how what is the expected impact on demand or, what it could do to revive the category, because this category is the only one which is kind of holding you back on market share or drive pushing you back.

Speaker #5: So if you can just share your broad thoughts behind the price cut—what you did, where it puts the pricing in terms of affordability for the consumer, and how you see this segment playing out going into the festive season?

Pramod Kumar: If you can just share your broad thoughts behind the price cut, what you did, where it puts the pricing in terms of affordability for the consumer, and how do you see this segment playing out going into the festival season?

Speaker #1: Thank you, Pramod. Great question. So, across the board in general, we've taken price increases for different variants, and they vary by different variants and different geographies.

Harshavardhan Chitale: Thank you, Pramod. Great question. Across the board, in general, we've taken price increases for different variants, and they vary by different variants and different geography. As we look at tactical opportunities, there are some variants, and some geographies where we did take a tactical price cut. While overall weighted average is a price increase, as Gunjan in earlier question asked, there are some pockets where we did do price correction, where we saw an opportunity to boost demand as well as gain share. As you rightly pointed out, that was in one variant of HF Deluxe. The early signs after we've done, it has given an immediate boost to demand as more customers are now coming into the market, because that was target.

Speaker #1: But as we look at tactical opportunities, there are some variants and some geographies where we did take a tactical price cut. So while overall, the weighted average is a price increase, as Gungeon in the earlier question asked, there are some pockets where we did do price correction where we saw an opportunity to boost demand as well as gain share.

Speaker #1: And as you rightly pointed out, that was in one variant of HF Deluxe. The early signs after what we've done is it has given an immediate boost to demand, as more customers are now coming into the market, because that was targeted at the absolute entry-level variant.

Speaker #1: It's basically for the first-time buyer, and we wanted to make it more and more accessible to first-time buyers. So we've seen a huge boost in the demand in the first few weeks after that has gone live.

Harshavardhan Chitale: That absolute entry-level variant is basically for the first-time buyer, and we wanted to make it more and more accessible to first-time buyers. We've seen a huge boost in the demand in the first few weeks after that has gone live. Now, how it plays out over the next 3, 4 months leading up to festive, we'll see shortly. First indications are very positive.

Speaker #1: Now, how it plays out over the next three to four months leading up to the festival, we'll see shortly. But first indications are very, very positive.

Speaker #6: Question, question. Pramod, I'll just pick up from what I said earlier and share here. Yeah, so as Harsh said, yes, the initial traction has been exciting.

Operator 2: Okay.

Ashutosh Varma: Pramod, I'll just pick up from what Harsh said.

Pramod Kumar: Yeah. Yes, sir.

Ashutosh Varma: I'll also share, yeah. As Harsh said, yes, the initial traction has been exciting. What we have seen is that they are drawing customers into our showrooms. We've also seen our Splendor portfolio growing stronger since we've introduced this. We are confident that there is this unaddressable market that we probably need to address, people who are falling off the mobility. In certain geographies, we feel this kind of intervention can just grow the category substantially.

Speaker #6: What we have seen is that they are drawing customers into our showrooms. We've also seen our Splendor portfolio growing stronger since we've introduced this.

Speaker #6: So, we are confident that there is this unaddressable market that we probably need to address. People who are falling off the mobility, and in certain geographies, we feel this kind of intervention can just grow the category substantially.

Speaker #5: Yeah. And is it is, is my understanding right that this category may not be ripe for electrification because the use case is very, very different very, tough, both in terms of the distances driven in a single day by many customers and also the kind of abuse these products take in terms of the load they is kind of well protected from the electrification risk.

Pramod Kumar: Is my understanding right that this category may not be right for electrification because the use case is very different, very tough, both in terms of the distances driven in a single day by many customers, and also the kind of abuse these products take in terms of the load they carry. In that sense, this category is kind of well protected from the electrification risk. Yeah, affordability is what you need to make work. Is my understanding right, Ashutosh?

Speaker #5: But yeah, affordability is what you need to make work. Is the understanding right, Ashutosh?

Speaker #1: In the near term, yes.

Speaker #6: Yeah, yeah. So, absolutely. I mean, the price points are hugely different for EV versus this category. The use cases are very different.

Harshavardhan Chitale: In the near term, yeah.

Ashutosh Varma: Yeah. Absolutely. The price points are hugely different from EV versus this category. The use cases are very different. The markets also. If you look where these two relatively play out, are very different markets, right? We don't feel that there is that risk there. This is reasonably protected that way. We just wanted to expand the market.

Speaker #6: I mean, so, and, and the markets also. I mean, if you look where these two relatively play out, they are very different markets. Right? So we don't feel that there is that risk there.

Speaker #6: But I mean, so this is reasonably protected that way. We just wanted to expand the market.

Speaker #5: And the last question, on the export bit—Harsh, if you can just help us understand how the export outlook is looking, because some of our peers that are much larger scale are talking about unprecedented growth.

Pramod Kumar: Last question on the export bit. Harsh, if you can just help us understand how is the export outlook looking, because some of our peers at a much larger scale are talking about unprecedented growth. How do you see the export opportunity for yourself, given that it's generally positive on margins and ASP and gives a diversification? Also on EVs, is there a possibility that you can fast-track your capacity expansion if you see demand on the ground remaining robust? Is it possible?

Speaker #5: So how do you see the export opportunity for yourself, given that it's generally positive on margins and ASP, and gives diversification? And also, on EVs?

Speaker #5: Is there a possibility that you can fast-track your capacity expansion if you see demand on the ground remaining robust? Is it possible?

Speaker #1: No, no, absolutely. So, as you saw, we grew more than 60% in the quarter on exports, and there's still a huge headroom, considering still where we are.

Harshavardhan Chitale: No, absolutely. As you saw, we grew more than 60% in the quarter on exports, and there's still a huge headroom considering still where we are. We are getting into more markets and introducing more products. We opened Germany. We did a launch in Germany of our ICE vehicles. We have started now selling in Nepal, our Vida. Vida had launch earlier in July in Nepal. You will see more and more products, more and more geographies continue to get opened. High growth trajectory that you saw in our exports over the last two years of 40% plus year-on-year, we are aiming for that kind of growth going forward. Volume expansion is planned, keeping in view growth in exports as well.

Speaker #1: So, we are getting into more markets and introducing more products. So, we opened Germany. We did a launch in Germany of our ICE vehicles.

Speaker #1: We have now started selling Veda in Nepal. Veda was launched earlier this month, in July, in Nepal. So you will see more and more products, and more and more geographies, continue to get opened.

Speaker #1: And the high growth trajectory that you saw in our exports over the last two years, of 40% plus year-on-year, we are aiming for that kind of growth going forward.

Speaker #1: And our volume expansion is planned keeping in view growth in exports as well.

Speaker #5: Rice.

Speaker #1: And ठीक है. And also, you're right. With the price realization and the FX gain that it provides, we did see the benefit of that also in the last quarter. I think we did get a 25 bps out of our higher FX realization.

Harshavardhan Chitale: Also, you're right, with the price realization and the FX gain that it provides, we did see benefit of that also in last quarter. I think we did get a 25 bps out of our higher FX realization. That was a contribution to EBITDA.

Speaker #1: That was a contribution to EBITDA.

Speaker #5: Thanks a lot, and wish you all the best. Thank you.

Speaker #6: Thank you. Anish, question comes from the line of Chandramoli Motia with Coleman Sack. Please go ahead.

Pramod Kumar: Thanks a lot and wish you all the best. Thank you.

Operator 2: Thank you. Our next question comes from the line of Chandramouli Muthiah with Goldman Sachs. Please go ahead.

Speaker #7: Hi, good morning, and thank you for taking my questions. My first question is just around the Delhi proposed EV policy starting FY28, and it's related to your comments on potentially unveiling an electric motorcycle.

Chandramouli Muthiah: Hi, good morning, and thank you for taking my questions. My first question is just around the Delhi proposed EV policy starting FY28. Just related to your comments on potentially unveiling an electric motorcycle. Just want to understand how the industry is taking the proposal, and then also what the negotiations are. Then how important do electric motorcycles become for Hero, if this policy were to go through?

Speaker #7: Just want to understand how the industry is taking the proposal, and then also what the negotiations are, and how important electric motorcycles become for Hero.

Speaker #7: if, if this policy were to go through.

Speaker #1: Okay, so thanks, Chandramoli, for your question. We have seen great momentum for EVs in Delhi. Last month, we saw a doubling of our inquiries in EV.

Harshavardhan Chitale: Okay. Thanks, Chandramouli, for your question. We have seen great momentum to EVs in Delhi. Last month, we saw doubling of our inquiries in EV. We also saw near doubling of our retails of EV. From fourth, we now jump to second with 16.7% market share in EV in Delhi. We are seeing momentum building up. We have increased supplies to Delhi from our side. We have made sure all our dealerships are activated. We have made sure that all our dealers, service techs, et cetera, are being trained. We are preparing our infrastructure. We are also, as you know, building charging networks. We are also increasing charge points from our own side to create a stronger charging infrastructure for customers.

Speaker #1: We also saw a near doubling of our retails of EVs. And from fourth, we have now jumped to second with a 16.7% market share in EV in Delhi.

Speaker #1: So, we are seeing momentum building up. We have increased supplies to Delhi from our side. We have made sure all our dealerships are activated.

Speaker #1: We have made sure that all our dealers, service techs, etc., are being trained. So we are preparing our infrastructure. We are also, as you know, building charging networks.

Speaker #1: So, we are also increasing charge points from our own side to create a stronger charging infrastructure for customers. Coming to the product portfolio, way before this policy goes into effect, we will have a range of motorcycles in the market.

Harshavardhan Chitale: Coming to product portfolio, way before this policy goes into effect, we will have a range of motorcycles into the market, we are progressing well on that, Kausalya can talk more about that.

Speaker #1: And we are progressing well on that, and Kausalya can talk more about it.

Speaker #8: Yeah. Hi, Chandramoli. Thanks for the question. We had unveiled our motorcycle platforms last year in Akma, in 2025. We continue to be committed to developing customer-centric, customer-oriented motorcycles.

Kausalya Nandakumar: Yeah. Hi, Chandramouli. Thanks for the question. We had unveiled our motorcycle platforms last year in EICMA in 2025. We continue to be committed to developing customer-centric, customer-oriented motorcycles. Like Harsh said, we are obviously making sure that Delhi citizens and consumers have the power of choice as they walk into our showrooms from the full range of the EV scooters, as well as the forthcoming motorcycle platforms that will be launched. We will have a full stack of available products to cater to every need before the policy comes fully into action.

Speaker #8: Like Harsh said, we are obviously making sure that Delhi citizens and consumers have the power of choice as they walk into our showrooms from the full range of the EV scooters.

Speaker #8: As well as the forthcoming motorcycle platforms that will be launched. And so, we will have a full stack of available products to cater to every need before the policy comes fully into action.

Speaker #5: Got it, that's helpful. Second question is just around the PLI comment that you had shared earlier—that 60% of the electric two-wheeler portfolio is now eligible for the PLI.

Chandramouli Muthiah: Got it. That's helpful. Second question is just around the PLI comment that you had shared earlier that 60% of the electric two-wheeler portfolio is now eligible for PLI. Just to clarify, what is the current percentage of company revenue that's coming from EVs? Roughly where you see that going with this additional capacity that's coming through, going forward.

Speaker #5: So, just to clarify, what is the current percentage of company revenue that's coming from EVs? And, roughly, where do you see that going with this additional capacity that's coming through, going forward?

Speaker #1: So, as a as I talked about, PLI this quarter, we've got a benefit of, a PLI benefit of, 48 48 crores. Which is covering 60% of our business.

Harshavardhan Chitale: As I talked about PLI this quarter, we've got a PLI benefit of INR 48 crore, which is covering 60% of our business. We expect that this benefit will cover almost all our products by end of December. During the full year, we should have the entire EV portfolio under PLI benefit. EV revenue last quarter is around INR 660 crore. That's almost translating to on a INR 12,999 crore is almost 5%. That's the percentage contribution coming from EV during Q1. Our plan is to aggressively grow this business. You will see in the rest of the year, the contribution from EV business as a contribution to the total revenue is likely to really move up.

Speaker #1: And we expect that this benefit will cover almost all our products by the end of December, right? So during the full year, we should have the entire EV portfolio under PLI benefit.

Speaker #1: Right? So, EV revenue last quarter is around ₹660 crores, right? So that's almost translating to, on our ₹12,999 crores, almost 5%.

Speaker #1: Right? So that's the percentage contribution coming from EV during Q1. Right? So our plan is to aggressively grow this business.

Speaker #1: So you will see in the rest of the year, the contribution from the EV business as a contribution to the total revenue is likely to really move up.

Speaker #5: Got it, that's helpful. And just one last question, related to comments you made on profitability. I just want to understand—you did mention that a couple of your EV models are now gross margin positive.

Chandramouli Muthiah: Got it. That's helpful. This last question relates to comments you had made on profitability. Just want to understand, you did mention that a couple of your EV models are now gross margin positive. Just want to understand on an EBITDA margin basis for the EV portfolio, how far we might be from breakeven? If the PLI comes through on the full portfolio towards the end of the year, what it potentially implies for full year EBITDA margin on the EV portfolio.

Speaker #5: So, just want to understand, on an EBITDA margin basis for the EV portfolio, how far we might be from breakeven. And if the PLI comes through on the full portfolio towards the end of the year, what that potentially implies for full year EBITDA margin on the EV portfolio.

Speaker #1: So Chandra, so we are we are working on our four pillar strategy. To achieve self-sustainability in EV business. Right? So as I had talked in the past, so clearly PLI is one big contributor.

Harshavardhan Chitale: Chandra, we are working on our four pillar strategy to achieve self-sustainability in EV business.

Speaker #1: I talked about how we are at 60%. Hopefully, by December, this should become 100%. So that's one thing. As we move forward, we will continue to improve the profitability of our EV business.

Vivek Anand: As I had talked in the past, clearly PLI is one big contributor. I talked about we are 60%. Hopefully, by December, this should become 100%. That's one thing. As we move forward, we'll continue to improve our profitability of EV business. Second is scale. We've launched some products, and some of the products have already started to be profitable. We are scaling up. As we scale up our capacity and as we scale up, we will continue to get operating leverage that will help improve our profitability. We are working on BOM cost reduction. We are driving efficiencies. We are working on LEAP savings, better unit economics for new launches, we are taking calibrated price increase in line with the industry.

Speaker #1: Second is scale. So we've launched some products, and some of the products have already started to be profitable, right? We are scaling up, so as we scale up our capacity, and as we scale up, we will continue to get operating leverage that will help improve our profitability.

Speaker #1: We are working on BOM cost reduction. We are driving efficiencies. We are working on LEAP savings and better unit economics for new launches.

Speaker #1: And we are taking calibrated price increases in line with the industry.

Speaker #2: Maybe Kausalya, you can talk about non-product revenue, which has also started kicking in, yeah.

Harshavardhan Chitale: Maybe, Kausalya, you can talk about non-product revenue, which has also started kicking in.

Speaker #8: So Chandra, just as a follow-up, of course the price increase is calibrated, keeping in mind how consumers are looking at the products and making sure they remain accessible.

Kausalya Nandakumar: Yeah. Chandra, just as a follow-up, of course, the price increase is as calibrated, keeping in mind how consumers are looking at the products and making sure that it remain accessible. We have a slew of now new offerings. We continue to improve accessibility through our battery-as-a-service offering across the portfolio that allows access point to consumers who wish to own an EV. We also are now amping up our focus on the revenue from connected services. We call it the Vida Edge program, consumers can avail that benefit as a paywall benefit. Once they subscribe to the services, we unlock a slew of connected features for them. In addition, we are bringing highly focused products, like extended warranty and other such value-added services for consumers to pick and choose from a bouquet of offerings.

Speaker #8: But we have a slew of now new offerings. We continue to improve accessibility through our battery-as-a-service offering across the portfolio that allows an access point to consumers who wish to own an EV.

Speaker #8: We are also now amping up our focus on revenue from connected services. We call it the Veda Edge program. Consumers can avail that benefit as a paywall benefit, and then once they subscribe to the services, we unlock a slew of connected features for them.

Speaker #8: In addition, we are bringing highly focused products, like extended warranty and other such value-added services, for consumers to pick and choose from a bouquet of offerings.

Speaker #8: All of this now will supplement how consumers can actually use their EVs more effectively, with a lot more confidence, as well as bring additional revenue into the Veda business.

Kausalya Nandakumar: All of this now will supplement how consumers can actually use their EVs more effectively with a lot more confidence, as well as bring additional revenue into the Vida business.

Speaker #1: Yeah. And just to sum up, we continuously improve our unit economics of our EV portfolio. So just to give some numbers: this quarter, the EBITDA loss has come down from almost 50,000 in the previous quarter to 40,000.

Vivek Anand: Yeah. Just to sum up, we continuously improve our unit economics of our EV portfolio. Just to give some numbers, this quarter, the EBITDA loss has come down from almost INR 50,000 from previous quarter to INR 40,000. It is on an improvement trajectory as we really move forward.

Speaker #1: So it's on an improvement trajectory as we really move forward.

Speaker #5: Awesome, that's helpful. Thank you very much, and all the best.

Harshavardhan Chitale: Yeah.

Chandramouli Muthiah: Awesome.

Chandramouli Muthiah: Awesome. That's helpful. Thank you very much, and all the best.

Speaker #7: Thank you. Our next question comes from the line of Kapil Singh with Nomura. Please go ahead.

Kausalya Nandakumar: Thank you.

Operator 2: Thank you. Our next question comes from the line of Kapil Singh with Nomura. Please go ahead.

Speaker #5: Yeah. Good morning, sir. On the EVs, firstly on the motorcycles, can you talk about what could be the timelines by which the platform would be ready?

Kapil Singh: Yeah, good morning, sir. On the EVs, firstly, on the motorcycles, can you talk about what could be the timelines by which the platform would be ready? In terms of segments, which are the segments where you see the adoption happening first? How would the EV motorcycle platform be different from the scooter platform? Just anything you can share in terms of as a concept.

Speaker #5: And, in terms of segments, which are the segments where you see the adoption happening first? And how would the EV platform be different from the EV motorcycle platform, and be different from the scooter platform?

Speaker #5: Just anything you can share in terms of the concept.

Speaker #8: Yeah. Hi Kapil, good morning. Kausalya here. We had talked a little bit about these two product platforms in ICMA 2025, so I'll reaffirm some of the pointers from there.

Kausalya Nandakumar: Yeah. Hi, Kapil. Good morning. Kausalya here. We had talked a little bit about these two product platforms in EICMA 2025, so I'll reaffirm some of the pointers from there. The first concept that we talked about was Project Ubix. It's our code name for a product that is suited very much for urban mobility. This is a new naked motorcycle concept, which we had revealed. This will be a good performance motorcycle for a segment of consumers who are looking for both the thrill and acceleration of a motorcycle on an EV platform, but also extremely city and road friendly. That's the first platform, Ubix, and you will hear more about this product as we come closer to launch. The second was our collaboration platform with Zero Motorcycles of USA, which is a high-performance motorcycle. It's code-named VXZ internally. This is coming into the much high-performance category.

Speaker #8: The first concept that we talked about was Project Ubex. It's our code name for a product that is suited very much for urban mobility.

Speaker #8: This is a new naked motorcycle concept which we had revealed. This will be a good performance motorcycle for a segment of consumers who are looking for both the thrill and acceleration of a motorcycle on an EV platform, but also extremely city- and road-friendly.

Speaker #8: That's the first platform, Ubex. And you will hear more about this product as we come closer to launch. The second was our collaboration platform with Zero Motorcycles of USA.

Speaker #8: Which is a high-performance motorcycle. It's code-named VXZ, internally. This is coming into the much higher performance category. This is our aspirational motorcycle, catering to those consumers who are looking for adventure, who are looking for a motorcycle that has true outperformance needs.

Kausalya Nandakumar: This is our aspirational motorcycle catering to those consumers who are looking for adventure, who are looking for a motorcycle that has a true out performance need. These two motorcycle concepts are already in display, and we've shared a lot more details about these products as they come closer. We continue to innovate and bring products into the market that consumers need. These will be new platforms. While we do take a lot of learnings from our scooter platform, the motorcycle platform now caters to the needs of a motorcycle consumer. Therefore, these are new platforms that we are developing with learnings from the scooter platform, but with technology that is suited to what a motorcycle consumer is actually looking for in terms of performance, rideability, credibility, and range.

Speaker #8: So these two motorcycle concepts are already on display, and we've shared a lot more details about these products as they come closer. And we continue to innovate and bring products into the market that consumers need.

Speaker #8: These will be new platforms. While we do take a lot of learnings from our scooter platform, the motorcycle platform now caters to the needs of a motorcycle consumer.

Speaker #8: And therefore, these are new platforms that we are developing with learnings from the scooter platform, but with technology that is suited to what a motorcycle consumer is actually looking for, in terms of performance, rideability, credibility, and range.

Speaker #5: Any color you can throw on the timelines? Is, is, is anything coming this year, next year, or will it be later?

Kapil Singh: Any color you can throw on the timelines? Is anything coming this year, next year, or it will be later?

Speaker #8: It's not this year. We will be looking at products coming in from next year.

Kausalya Nandakumar: Not this year. We will be looking at products coming in from the next year.

Speaker #5: Okay, sure. And the second question was on EV profitability. Any broad range in terms of where the break-even volumes will land? And, if you have done any cost benchmarking with competition, what are the areas where there are gaps that you need to bridge?

Kapil Singh: Okay, sure. The second question was on the EV profitability. Any broad range in terms of where the break-even volumes will land? If you have done any cost benchmarking with competition, what are the areas where there are gaps which you need to bridge? Is it mainly scale or is it mainly the cost of the platform? Just any thoughts on this would be helpful.

Speaker #5: Is it mainly scale, or is it mainly the cost of the platform? Just any thoughts on this would be helpful.

Speaker #8: Yeah, so Kapil, I think a couple of elements. I'm just going back to what Vivek already shared. There are four major levers that we focus on, on profitability.

Kausalya Nandakumar: Yeah. Kapil, I think couple of elements. I'm just going back to what Vivek already shared. There are four major levers that we focus on profitability. The first, of course, is scale. We've just ramped up from the 15,000 mark to this quarter, looking at close to 30,000. The scale gives us a lot of leverage, which will now start kicking in across the portfolio. On the BOM cost in specific, this is the continuous activity. Internally, we've shared what we call the LEAP Savings Program. This is a relentless focus on how we actually look at cost and design for cost. We have some unique value proposition like the removable battery that gives consumers a power of choice in terms of charging. Therefore, we believe our designs are unique and trained to consumer need.

Speaker #8: The first, of course, is scale. We've just ramped up from the 15,000 mark to this quarter looking at close to 30,000. The scale gives us a lot of leverage, which will now start kicking in across the portfolio.

Speaker #8: On the BOM cost in specific, this is a continuous activity. Internally, we've shared what we call the LEAP savings program. This is a relentless focus on how we actually look at cost and design for cost.

Speaker #8: We have some unique value propositions, like the removable battery that gives consumers the power of choice in terms of charging. Therefore, we believe our designs are unique and tailored to customer need.

Speaker #8: But every quarter, we are seeing an improvement because we are putting all four levers in place at the same time. We should continue on our trajectory to look positive by the end of the year.

Kausalya Nandakumar: Every quarter we are seeing an improvement, because we are putting all four levers at the same time, and we should continue on our trajectory to look positive by the end of the year.

Speaker #5: Sure. And just lastly, on the volume growth for the industry, how are you thinking about it, especially in the second half? Should we expect growth to continue?

Kapil Singh: Sure. Just lastly, on the volume growth for the industry, how are you thinking about it, especially in H2? Should we expect growth to continue because the base is high? Just any thoughts there. That's all. Thank you.

Speaker #5: Because the base is high. So, just any thoughts there. That's all. Thank you.

Speaker #1: I mean, we see strong momentum not just in quarter one, but also in July. And, the momentum continues to be strong. So, from 67% growth in quarter one for the industry, the industry grew at more than 80% in July.

Harshavardhan Chitale: We see a strong momentum, not just Q1, but also July, and the momentum continues strong. From 67% growth in Q1 for the industry, our industry grew at more than 80% in July. I think the growth is strong, and there are no indications of the momentum slowing down yet.

Speaker #1: So, I think the growth is strong, and there are no indications of the momentum slowing down yet. No.

Speaker #5: My question was on the two-wheeler industry, not on EVs.

Kapil Singh: My question was on the two-wheeler industry. Not on we.

Speaker #1: Oh, I'm sorry. Okay. So, two-wheeler industry, quarter one, the total industry ICE plus EV put together grew about 14% in quarter one. We see a similar trajectory for quarter two.

Harshavardhan Chitale: Oh, I'm sorry. Okay. Two-wheeler industry, Q1, the total industry, ICE plus EV put together grew about 14% in Q1. We see similar trajectory for Q2. Looking at how July has started. H2, you are right, does have a base effect of a big jump that happened in sales in H2 last year, post GST. Hence, from a base perspective, the year-on-year growth will be lower, but the way momentum is, we expect still a positive growth in H2. Right now, plans are towards full year of approaching double-digit as an industry growth.

Speaker #1: Looking at how July has started, H2—you're right—does have a base effect from the big jump that happened in, say, sales in H2 last year post-GST.

Speaker #1: Hence, from a base perspective, the year-on-year growth will be lower. But, given the way momentum is, we still expect positive growth in H2. Our plans right now are towards achieving double-digit growth for the full year.

Speaker #1: As a industry growth.

Speaker #5: Okay. Great. Thank you, and best wishes.

Speaker #1: Thank you.

Kapil Singh: Okay, great. Thank you and best wishes.

Speaker #5: Thank you.

Speaker #2: Our next question comes from the line of Raghunandan N.L. with Noama Research. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Raghu Nandan NL with Nomura Research. Please go ahead.

Speaker #6: Congratulations, team, on strong numbers and also for the comprehensive investor presentation. Thanks to the team and Karthik. Firstly, can you talk about upcoming models with regards to premium motorcycles?

Raghu Nandan NL: Congratulations, team, on strong numbers and also for the comprehensive investor presentation. Thanks to the team and Sarthak. Firstly, can you talk about upcoming models with regards to premium motorcycles? There are expectations of models like Xpulse 421, XMR250. Your thoughts there will be helpful.

Speaker #6: There are expectations for models like the Xpulse 421 and the XMR 250. Your thoughts there would be helpful.

Speaker #7: Hi, this is Anuj. There are a lot of models which are in, working. You rightly said, two of the flagship ones. In the next 12 months, you'll see many more coming up.

Anuj Dua: Hi, this is Anuj. There are a lot of models which are in working. You rightly said two of the flagship ones. In next 12 months, you'll see many more coming up. Market will be fully primed up with these models. You'll see a few starting from this festive itself and going up to next few quarters as well. We'll see a lot of action in the premium segment. We are fully aware that customers love the brand XPulse, not just in India, but globally as well. Thank you.

Speaker #7: The market will be fully primed with these models. You'll see a few starting from this festive season itself and going up to the next few quarters as well.

Speaker #7: We'll see a lot of action in the premium segment. We are fully aware that customers love the Xpulse brand, not just in India, but globally as well.

Speaker #7: Thank you.

Speaker #6: Noted, sir. So, before the festive season, these products should be available, sir?

Raghu Nandan NL: Noted, sir. Before the festive, these products should be available, sir?

Speaker #7: A few of the refreshes will be, and then some of the larger, full-body change models we'll see in the upcoming quarters as well.

Anuj Dua: A few of the refreshes will be. Some of the larger full body change models we'll see in the upcoming quarters as well.

Speaker #1: But not the two that you mentioned. They won’t be before festive, but there are a few others that will, in the premium range, that will get launched before festive.

Vivek Anand: Not the two that you mentioned. They won't be before festive. There are a few others in the premium range that will get launched before festive.

Speaker #6: Thanks for clarifying. Sir, secondly, on the PAM revenue—the revenue had grown about 5% last year, and this year we have started the growth with 30%.

Raghu Nandan NL: Thanks for clarifying. Sir, secondly, on the P&A revenue. The revenue had grown about 5% last year, and this year we have started the growth with 30%. Has the company been successful in expanding penetration, taking market share from the gray market? Can there be a 20% kind of a growth in FY27?

Speaker #6: Has the company been successful in expanding penetration and taking market share from the gray market? Can there be 20% kind of growth in FY27?

Speaker #7: So Raghu, you're right. I mean, strong growth—close to 25% and beyond. We see the trend similarly in July as well. It's a mix of actions that has led to it.

Ashutosh Varma: Raghu, you're right. I mean, strong growth, close to 25% and beyond. We see the trend similarly in July as well. A mix of actions that has led to it. One, of course, is the expanded reach. We have penetrated deeper with formats. There's a lot of operational excellence, efficiency initiatives that are being carried out. Larger SKU coverage, new parts groups, new line of businesses doing well. I mean, parts, while we are good, we believe there is a lot more to do and we are still about scratching the surface. Hence, a lot of headroom. Especially, I mean, the growth that we see coming in is with the new lines of businesses that have started doing exceptionally well.

Speaker #7: One, of course, is the expanded reach. We have penetrated deeper with formats. There are a lot of operational excellence and efficiency initiatives that are being carried out.

Speaker #7: So, larger SKU coverage, new parts groups, new lines of business are doing well. So, I mean, in parts, while we are good, we believe there is a lot more to do.

Speaker #7: We are still just scratching the surface, and hence, there is a lot of headroom. And especially, I mean, the growth that we see coming in is from the new lines of businesses that have started doing exceptionally well.

Speaker #1: And Raghu, as you rightly pointed out, there is growth by eating into the gray market. But there is also growth through accessories, which we increasingly see traction in as our Veda range increases and our premium range increases.

Vivek Anand: Raghu, as you rightly pointed out, there is a growth by eating into gray market. There is also growth through accessories, which increasingly we see traction as our VIDA range increases and premium range increases. Also in the parts business, there is a lot of growth coming out of our exports business. That's the reason why the new investment of GPC 2.0 that we announced with a CapEx of INR 750 crore. That pretty much more than doubles our capacity to handle parts business.

Speaker #1: Also, in the parts business, there is a lot of growth coming out of our exports business. So, and that's the reason why the new investment of GPC 2.0 that we announced, with a capex of ₹750 crore, will pretty much more than double our capacity to handle the parts business.

Speaker #6: Noted, sir. Thank you for the details. One last question on the commodity cost impact: it is expected to be small in Q2. Is a 50 basis point increase quarter-on-quarter a fair estimate?

Raghu Nandan NL: Noted, sir. Thank you for the details. One last question on the commodity cost impact that is expected to be small in Q2. Is 50 basis point increase QOQ a fair estimate? Around 4% price hike has been taken so far. Would you need further price hikes, or would you be focusing on cost savings?

Speaker #6: Around a 4% price hike has been taken so far. Would you need further price hikes, or would you be focusing on cost savings?

Speaker #7: Raghu, I think, as I said, we are expecting a marginal uptick in input cost inflation, which we plan to neutralize by continued improvement of product mix.

Vivek Anand: Raghu, as I said, we are expecting a marginal uptick in input cost inflation, which we plan to neutralize by continued improvement of product mix and optimizing our discretionary spends and accelerating cost saving programs. Right? We are confident of mitigating the impact of any potential material price inflation during the quarter through these initiatives.

Speaker #7: And optimizing our discretionary spends and accelerating cost-saving programs, right? So we are confident of mitigating the impact of any potential material price inflation during the quarter through these initiatives.

Speaker #6: Got it, sir. Thank you. Thank you so much. Wishing you all the best.

Raghu Nandan NL: Got it, sir. Thank you so much. Wishing all the best.

Speaker #2: Thank you. Our next question comes from the line of Sonal Gupta with HSBC Mutual Fund. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Sonal Gupta with HSBC Mutual Fund. Please go ahead.

Speaker #8: Thanks for taking my question. I had a couple of questions around this, I mean, again, on the pricing. So, what have been the price increases that we've taken, right?

Sonal Gupta: Hi. Good morning, and thanks for taking my question. Just had a couple of questions around this. Again, on the pricing, what has been the price increases that we've taken for this quarter? In July, what sort of percentage price increase have we taken?

Speaker #8: Like, on, for this quarter and, my understanding, and then in July, what sort of percentage price increase have we taken?

Speaker #1: So we have taken, so far, about 4.5% of blended average price increase cumulatively over the last three to four months.

Harshavardhan Chitale: We have taken so far about, cumulatively, from over the last 3, 4 months, 4.5% of a blended average price increase, on different models in different months. That's why I gave you a blended 4.5%. This is on the ICE part. On EV, even a higher increase. In fact, it's closer to double-digit price increase. Part of that is actually price increase also with a differentiation, with more functionality getting offered there. There, the price increase in terms of per unit price is in early double digits.

Speaker #1: So on different models in different months. So that's why I gave you a blended four and a half percent. And this is on the ice part.

Speaker #1: On EV, even higher increase. In fact, it's closer to a double-digit price increase. But part of that is actually a price increase also with the differentiation, with more functionality getting offered there.

Speaker #1: So, there, the price increase in terms of per unit price is in double digits only.

Speaker #8: Got it, sir. So just to clarify, is this four and a half percent since the beginning of the year, or is this just April and July put together?

Sonal Gupta: Got it, sir. Just this 4.5% is since the beginning of the year, or this is just April and July put together?

Speaker #1: This is from the end of February.

Harshavardhan Chitale: This is from February, end of February.

Speaker #8: End of Feb, so yeah. So, and would this include any July price increases as well, or is this—?

Sonal Gupta: End of Feb. Would this include any July price increases as well?

Speaker #1: In July, we did a marginal price increase. As Vivek mentioned, we expect a marginal cost increase on commodity, which is already getting fully mitigated through our mix and LEAP savings.

Harshavardhan Chitale: In July, we did a marginal price increase. As Vivek mentioned, we expect marginal cost increase on commodity, which is already getting fully mitigated through our mix and LEAP savings and optimizations of cost. In anticipation, we also took a marginal price increase in July in ICE.

Speaker #1: And optimizations of cost. But in anticipation, we also took a marginal price increase in July in our ICE, as well as in ICE last year.

Speaker #8: Good. No. So, yeah, the main question was really around, I mean, did these price increases—I mean, some of it obviously, given the unprecedented cost inflation, is warranted.

Sonal Gupta: Got it. My question was really around these price increases. Some of it, obviously, given the unprecedented cost inflation, is warranted. Given that our category itself, our core category, has been sort of struggling in terms of growth, and if I look at your overall market share on a year-on-year basis, Vahan market share in Q1 has dropped like 150 basis points. At what point do you think that we'll calibrate this and focus more on driving growth rather than just taking price increases? I'm just wondering that at what point do you think that you've taken that we cannot pass on more to the consumer in the shorter term?

Speaker #8: But, I mean, like, at what—given that our category itself, our core category, has been, sort of, struggling in terms of growth. And if I look at your overall market share on a year-on-year basis, Wahan market share in Q1 has dropped, like, 150 basis points.

Speaker #8: At what point do you think that we'll calibrate this and focus more on driving growth rather than just, I mean, like, taking price increases?

Speaker #8: So I'm just wondering, at what point do you think that you've taken—that we cannot pass on more to the consumer—in the shorter term, right?

Speaker #1: No, so I think we continue to remain focused on growth. That's what you saw in the 23% volume growth in the quarter and so on.

Harshavardhan Chitale: I think we continue to remain focused on growth, and that's what you saw in 23% volume growth in the quarter and so on. Hence, as Vivek said, it's calibrated price increase. We've not passed on all of the commodity cost. There are areas where we've passed on less, there are areas we've passed on more. On some absolute entry-level variants where we wanted to expand the market and bring new customers into the market, we've even taken a calibrated price reduction for some geographies. That was a question earlier from Pramod on HF in some states. That is immediately seeing a jump in our volumes in that category. Our focus, to answer your question, continues to remain on driving volume growth and hence calibrating price increases appropriately.

Speaker #1: And, hence, as Vivek said, it's a calibrated price increase. We've not passed on all of the commodity costs, and there are areas where we've passed on less.

Speaker #1: There are areas where we've passed on more. And on some absolute entry-level variants, where we wanted to expand the market and bring new customers in, we've even taken a calibrated cost reduction—a price reduction.

Speaker #1: For some geographies—and that was a question earlier from Pramod—we are immediately seeing a jump in our volumes in that category. So our focus, to answer your question, continues to remain on driving volume growth and hence calibrating price increases appropriately.

Speaker #8: Okay, great. Thank you so much.

Speaker #2: Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to management for the closing remarks.

Sonal Gupta: Okay, sir. Great. Thank you so much.

Operator 2: Thank you. Ladies and gentlemen, due to the time constraint, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team.

Speaker #2: Thank you. And over to you, team.

Speaker #1: Thank you for joining us today. There are more details available on our website, where we've uploaded, for the first time, our quarterly results presentation.

Harshavardhan Chitale: Thank you for joining us today. There are more details available on our website where we've uploaded for the first time our quarterly results presentation. That gives a little more color. Please do take a look at it, and if there are any follow-up questions, do write to us and we will get back to you.

Speaker #1: That gives a little more color. Please do take a look at it, and if there are any follow-up questions, do write to us, and we will get back to you.

Speaker #7: Thank you. Thank you.

Speaker #2: Thank you so much, sir. Ladies and gentlemen, on behalf of Equity Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.

Operator 2: Thank you.

Harshavardhan Chitale: Thank you.

Operator 2: Thank you so much, sir. Ladies and gentlemen, on behalf of Equirus Securities, that concludes this conference. Thank you for joining us and you may now disconnect your line.

Speaker #7: Thank you. Thank you.

Harshavardhan Chitale: Thank you.

Raghu Nandan NL: Thank you.

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