Hero MotoCorp's 31% Sales Surge: Is The Two-Wheeler King Back In The Game?

Hero MotoCorp sold 144,685 more units in November 2025, bringing total sales to 604,490, an increase of 31% year over year. Its domestic sales stood at 570,520 units, and exports contributed 33,970 units.

The export segment witnessed a 70% year-on-year growth, making Hero the fastest-growing exporter among all two-wheeler manufacturers. Strong demand for models such as the Hunk 125R and Hunk 160R in Latin America and Africa drove this export surge.

The company attributes its domestic success to positive consumer sentiment in both urban and rural markets, favorable macroeconomic conditions, and GST benefits that made two-wheelers more affordable.

New product launches—the Xtreme 125R, Glamour X 125, Destini 110, and Xoom 160—have been particularly well-received, contributing to both volume growth and premiumisation of Hero's product portfolio. These models are helping the company improve its average selling price, a critical metric for margin expansion.

However, Hero's November dispatches declined 5% from October's 635,808 units, as post-festive demand tapered. It will be interesting to see if Hero can continue to grow at a stellar rate or endure a sharper correction as the festive tailwind fades.

During the last earnings call, the management was optimistic about consumer demand. CEO Vikram Kasbekar highlighted that consumer sentiment has remained robust even after the festive season, with retail momentum expected to sustain.

Hero reported nearly 1 million retails on VAHAN during the festive period, with market share expanding by 3.7% year-on-year to 31.6% in October.

Hero MotoCorp ended November 2025 with a market share of 30.7%, indicating that its leadership in the domestic two-wheeler segment remains intact. In fact, Hero has not only retained its top position but also widened the gap versus Honda and TVS, which held a share of 28.7% and 19.7% respectively.

While Honda grew its shipments by 23% year over year, vehicle deliveries for TVS were lower at 20%. Hero is actively gaining market share in the mass-market commuter and entry-level premium segments where models like the Splendor, HF Deluxe, and Xtreme 125R dominate.

The company's strategy of launching twelve new models and variants for the festive season—its highest ever—has clearly paid off.

The management highlighted that the entry segment share expanded for the second consecutive quarter, gaining 3% in fiscal Q2 and 5% in H1.

The launch of HF Deluxe Pro, coupled with an emotional customer connect campaign, helped drive this growth.

First-time buyers, typically hovering around 70-72%, jumped to 81% during the festive season, indicating strong penetration into new customer segments.

Hero MotoCorp reported robust second-quarter results for fiscal 2026, with EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins expanding by 55 basis points year-on-year to 15%. In Q2 it reported revenue of ₹12,126 crore, an increase of 16% year over year, while its net income rose at a similar rate to ₹1,393 crore.

Hero’s gross margin improved from 16.76% to 17.07% over the last 12 months, due to better product mix, favorable input cost trends, and operational efficiencies.

The margin expansion is noteworthy given continued investments in brand building, new businesses, and product development. CFO Vivek Anand confirmed that advertisement spend for the first half grew by 10%, demonstrating Hero’s commitment to strengthening its market position.

The ICE business alone delivered an EBITDA margin of 17.7%, up 121 basis points year-on-year.

However, the EV business remains a drag on overall profitability. The company invested ₹252 crore in the EV segment during the quarter. While Vida, Hero's electric scooter brand, achieved its highest-ever market share of 11.7% and grew 66% year-on-year, it continues to operate at negative gross margins.

The management indicated that “product contribution neutrality” is the near-term goal, with initiatives including cost optimisation, PLI benefits, and a recent price increase expected to improve margins.

In the last decade, Hero MotoCorp stock has given returns of close to 150% to shareholders. In addition to long-term capital gains, shareholders benefit from a steady stream of dividend income.

Analysts tracking Hero MotoCorp stock forecast revenue to grow at a compounded annual growth rate of 8.8% through fiscal 2028. Comparatively, adjusted earnings are forecast to expand from ₹218.70 per share in fiscal 2025 to ₹347 per share in fiscal 2028, indicating an annual growth of over 10%.

Currently, Hero stock trades at a forward price-to-earnings multiple of 23x, which is higher than its 10-year average of 17.5x.

Dalal Street remains cautious on Hero stock due to its elevated multiple and expects it to fall by 8%, given consensus price targets.

Management's guidance of 8% to 10% industry growth in the second half of fiscal 2026, with Hero expected to outperform, provides a reasonable baseline for expectations.

The company's inventory levels are at multi-year lows, and receivables in the Indian business have fallen to just 12 days from 30 days in previous years, indicating strong underlying demand.

However, the month-on-month decline signals that the November spike may not be entirely sustainable. Further, commodity inflation, particularly in aluminum, could pressure margins in Q3. The company also faces execution challenges in scaling its EV business to profitability while maintaining market share gains in traditional segments.

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