Hero MotoCorp Bets on Core Growth, ₹1,100 Cr Investment Planned for FY26

Hero MotoCorp is betting its FY26 growth on sharpening execution in the entry-level and 125cc motorcycle categories—its “Grow the Core” strategy—while gradually expanding its presence in premium motorcycles and electric two-wheelers.

The country’s largest two-wheeler manufacturer closed FY25 with record revenues of ₹40,756 crore (up 8.8% YoY) and a net profit of ₹4,610 crore (up 16.2% YoY), supported by stable volumes and improved profitability. It sold 58.99 lakh two-wheelers, a 5% rise over FY24.

While these gains underscore resilience in its core business, Hero’s domestic market share slipped to 29.5% in FY25 (from 30.9% in FY24), highlighting pressure in segments like scooters and EVs, where competition has intensified.

The company has committed a capex of ₹1,000–1,100 crore for FY26, up from ₹900 crore in FY25. These funds will support product development, retail expansion, premium brand building, and EV initiatives.

Entry and Deluxe Segments Regain Momentum

Hero’s “Grow the Core” plan showed results in FY25. The entry-level 100cc segment, led by the Splendor+, saw a 6% market share gain YoY and 12% sequentially in Q4 FY25. In its category, the Splendor+ maintained a near 90% share.

The Xtreme 125R, launched in early 2024, helped the company regain lost ground in the 125cc deluxe segment. Hero was the only OEM to gain share in this category since Q4 FY24, with the model delivering a 7.4% YoY market share gain. A new single-seat variant was launched in April to extend the momentum.

Beyond vehicle sales, Hero reported its highest-ever revenue from Parts, Accessories & Merchandise (PAM) at ₹5,828 crore, contributing 14% to overall revenue.

Premium Portfolio Gains Visibility, But Scaling Remains a Challenge

In a segment where Hero has historically underperformed, FY25 marked visible progress. The launch of the Xpulse 210 and Xtreme 250R provided the brand with credible entries in the upper end of the market. Both models have received positive reviews and aim to tap into younger, performance-oriented customers, claims the company.

Hero expanded its premium dealership network to 80 outlets across 73 cities to support this play. While the retail push is a step forward, the segment remains underpenetrated compared to rivals with a deeper and longer presence in premium motorcycles.

The company’s full-year scooter market share fell to 5.5%, down from 7.1% in FY24. Hero saw a marginal 0.7 percentage point gain in Q4 FY25, supported by the Destini 125 refresh. The recently launched Xoom 125, introduced in March 2025, is expected to bolster Hero’s urban scooter play, though it faces stiff competition from entrenched players.

EV Expansion Continues Gradually

In FY25, Hero retailed 64,276 EVs, a 13% drop from the previous year’s 73,833 units. However, retail sales ended higher in March 2025, with a 6.1% market share and over 8,000 units sold that month.

The company remains committed to scaling the Vida EV brand, with new, more affordable variants slated for launch in H1 FY26. The pace of network rollout and pricing will be critical in determining whether Hero can expand its EV footprint meaningfully in FY26.

Profitability Holds Steady as Pricing Discipline Returns

Average price increases for FY25 were ₹970 per unit, sharply lower than FY24’s ₹2,130, reflecting pricing discipline amid a more price-sensitive market. EBITDA came in at ₹5,868 crore, up 11.6%, with EBITDA margin at 14.4%.

Financing penetration improved to 62.6%, with Hero FinCorp accounting for 27% of retail financing, providing a cushion to rural and semi-urban demand where financing access remains key.

Investment in Euler Marks Strategic Diversification

Hero also made its first formal move into electric commercial mobility, acquiring a 32.5% stake in Euler Motors for ₹525 crore. The move gives Hero exposure to the fast-growing electric three-wheeler market—a space with robust demand from last-mile and fleet operators.

While the investment marks a strategic adjacency, Hero has not yet outlined how Euler aligns with its mainstream two-wheeler or EV strategy. The commercial EV market is evolving rapidly, and the ability to extract synergy or scale from this venture remains to be seen.

With its mass motorcycle base stabilising, early moves in premium, and EVs showing promise, Hero enters FY26 with cautious optimism. Execution will be key as the company navigates evolving customer expectations, growing urban mobility complexity, and a hyper-competitive landscape.