With margins back to pre-covid level, Hero MotoCorp targets enhanced market share, biz growth

With its margins back to pre-Covid levels, Hero MotoCorp is now looking at sustainable growth, enhancing market share across segments on the back of new product launches over the next few quarters, according to a top company executive.

The country’s largest two-wheeler maker is also looking at enhancing production capacity to roll out Harley-Davidson X440 which has already received over 25,000 bookings.

The company is also on track to introduce its electric vehicle range in 100 cities by this year-end with a focus on attaining clear leadership in the vertical.

”The ICE (internal combustion engine) business margins are now 14.5 per cent. Effectively, it means that we are back to pre-Covid levels which were around 14 per cent,” Hero MotoCorp CEO Niranjan Gupta said in an analyst call.

Therefore, moving forward, having covered the margins back to pre-Covid levels, the company’s singular focus is going to be growth and market share on the back of lots of launches that have been done and are in the offing in the next few quarters, he added.

During the Covid period and with the cost inflation, the margins had got down to around 11.5 per cent, Gupta noted.

Hero MotoCorp’s overall retail market share in the domestic market currently stands at around 35 per cent.

For the April-June quarter, the company reported a consolidated net profit and revenue of Rs 701 crore and Rs 8,851 crore, respectively.

Gupta said with over 25,000 bookings of Harley-Davidson X440 already in its kitty, the company needs to ramp up capacity and demand fulfilment going ahead.

Replying to a query regarding the expansion of the Harley range, he noted: ”But obviously there is a thinking in future to extend the portfolio and also to look at geographies, but those are discussions that we will have with our partner Harley-Davidson at an appropriate point in time.” Gupta said the company remained on track to ramp up its presence across various cities.

”We talked about 100 cities by December, glad to report that we have already crossed 36 cities as we speak and we will be covering 100 cities well before December end. And then of course we will be building the portfolio, which will be next year, on our way to EV leadership which is our goal,” he stated.

Commenting on the overall two-wheeler industry, he noted that the government’s huge spending on capital expenditure would translate into income demand and employment and that augurs well for the segment.

”RBI has paused the rate for the last two or three times and clearly that means that the cycle of increased inflation is going to pause and that again will mean more income in the hands of consumers to be able to spend,” he added.

The third factor of course is the monsoon which so far has been pretty decent, Gupta said.

”All these factors combined, these augur well for a double-digit growth as you move forward to the festive season,” he added.