Ladies and gentlemen, good day and welcome to Hero MotoCorp Q4 and FY25 earnings conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in the 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Kumar from ICICI Securities. Thank you, and over to you, sir.
Thank you, Manav. Good morning, everyone. On behalf of ICICI Securities, I would like to welcome everyone on Hero MotoCorp's Q4 and FY25 earnings call. I would like to thank the management of Hero MotoCorp for giving us this opportunity to host the call. Now, I would like to hand the call to Mr. Umang Khurana, Chief Risk Officer and Head Investor Relations. Over to you, Umang. Thank you.
Thank you, Vivek. Thank you for hosting us. Hello, everyone. You may all have noticed that we have postponed our investor day. We believe it to be respectful and prudent. We shall come back to you on this. On the call for us today, we have Mr. Kasbekar, our Chief Executive Officer, our CFO, Vivek Anand, and India Business Head, Ashutosh Varma. We will begin with the call, Mr. Kasbekar's comments on the call, and then Vivek will have his opening comments as well, after which we will open this for questions and answers. Mr. Kasbekar, could we begin with your comments, please?
Thank you, Umang.
Namaskar, and welcome to everyone to the Hero MotoCorp earnings call. We hope you all are keeping safe. We salute our armed forces for protecting the nation and keeping us all safe. Now, moving on to business, I'm sure you must have seen our strong quarterly performance. We ended the full year 2025 clocking our highest-ever top line and bottom line. I'm happy to report that we have retained our leadership as the world's largest manufacturer of motorcycles and scooters for 24 consecutive years. Let me start with the overall economy. While there is an ongoing global turmoil due to the border situation and trade tensions, on the domestic front, the economy has started on a positive note, driven by tapering inflation, lowering interest rates, and income tax cuts, and expectations of a better monsoon.
With regards to the two-wheeler industry riding on the wave of a positive economic momentum, two-wheeler demand is shaping up nicely, boosted particularly by a strong marriage season in May and June. Overall, we expect the industry to grow in the mid and high single digits in FY2026. Key business highlights for Q4 and FY2025. In my first call, I have talked about our medium to long-range term strategy, and my focus will be on execution. Let me now talk a bit on some of these. On VAHAN, we have retained the number one spot during the quarter and on the full-year basis. For the first four months in the calendar year, we have gained month-on-month market share. We have seen a strong bounce back in the entry segment also. In the 125 motorcycles, on the back of Xtreme 125R, we continued to outperform the category.
We launched two scooters in the quarter, Zoom 125 in the 125cc category and Destiny 125 XTech in the commuter segment category. Both have been received very positively in the market. Our latest launches in the premium segment, XPULSE 210 and Extreme 250 R, have seen very good responses. Global business has grown at 43%, 2X of the industry growth. Our strategy of focus in the top 10 markets is starting to work well. In the EV business, we gained market share during the quarter and exited March at 7%. The EV business is on a sustained growth curve held by investments behind the brand, brand building, pricing interventions, and launch of the Vida V2 scooter. In 30 cities, we have grown by 20%, and in 60 cities, we have grown by 10%.
Lastly, I want to reiterate that my focus will be on implementing our strategy to win and gain market share. Over to you, Vivek.
Thank you, Vikramji. Good morning, all, and thank you once again for joining the call today. I'm pleased to report strong financial performance of Hero MotoCorp for the fourth quarter financial year 2025 and full year 2025, driven by disciplined fiscal management and focused strategic execution. Firstly, for the quarter, the company recorded quarterly revenue of INR 9,939 crores, EBITDA of INR 1,416 crores, and PAT of INR 1,081 crores. The company reported quarterly revenue for parts, accessories, and merchandise business at INR 1,553 crores, a year-on-year growth of 11%. The EBITDA margin during the quarter for ICE business stood at 16.1%, driven by mix improvements, lower material cost, and LEAP savings, while we continue to invest behind brand building and new business. During the quarter, after taking into account the investment behind EV business, approximately INR 143 crores, the overall EBITDA margin stands at 14.2%. I'll now move to full year 2025.
We achieved the highest-ever revenue from operations and PAT. Revenue stood at INR 40,756 crore, up 9%, EBITDA of INR 5,868 crore, up 12%, and PAT of INR 4,610 crore, a growth of 16%. ICE EBITDA margin at 16.2% improved by 90 basis points, driven by mix improvement, price, and cost savings. During the year, after taking into account investments behind EV business, approximately INR 630 crore, the overall EBITDA margin improved by 40 basis points to 14.4%. Our continued focus on cash management resulted in delivering strong cash from operations, strengthening our financial performance. I'm happy to share that the company has declared a final dividend of INR 65 per equity share. Including the interim dividend of INR 100 per share, the total dividend for 2024-2025 financial year amounts to INR 165 per equity share, representing a payout of 8,250%. We continue to maintain market leadership with sales of 5.9 million vehicles in the financial year 2024-2025.
Further, we maintained our market leadership in the 100 cc category in both entry and deluxe segments, and we have rapidly gained market share in the 125 cc segment, driven by success of Xtreme 125R. In global business as well, we continued our strong performance, reporting our highest-ever quarterly market share. Overall, our dispatches in financial year 2025 grew by 43% year-on-year, almost 2X of industry. This performance was broad-based, as almost all our key markets, including Bangladesh, Colombia, Nepal, and New Mexico, grew. As part of our planned operational strategy, the company implemented a temporary production halt from April 17 to 19 at its Gurugram, Haridwar, and Neemrana facilities to facilitate supply chain alignment and conduct scheduled maintenance and infrastructure enhancements. Production is expected to normalize during this month. It is important to clarify here that we continue to grow our retail sales during the current quarter.
Moving ahead, we'll continue to invest behind growth. We remain consistent in our commitment towards investing behind premium scooters and EV portfolio and to improve customer experience in stores with Hero 2.0 and Premium. Diversifying our portfolio into adjacent categories is a key part of our strategy. I'm happy to share this quarter we acquired a 34.1% stake in Euler Motors for an investment of INR 510 crore, which makes Euler Motors an associate company of Hero MotoCorp. Through this, we have marked our entry into the fast-growing EV three-wheeler category. We are excited about the prospects of growing this business. I'm also happy to inform that with Ather Energy, our associate company is now listed on the National Stock Exchange. The capital raise allows Ather management to accelerate their growth.
We are positive about the growth prospects of the two-wheeler industry, and with the continuity of demand and recovery in the broader two-wheeler market for us, both rural and urban, ramp-up of the 125cc portfolio, new product launches, and strong investment behind brand power brands, we expect to grow ahead of the industry. Thank you for listening to me, and on this note, let me open the floor for Q&A. Over to you, Umang.
Thank you.
Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. I repeat, please restrict yourself to only two questions per participant. We have a first question from the line of Vipul from HSBC. Please go ahead.
Yeah, hi. Thank you for taking my question. Sir, my question is from the next five to ten years' perspective. Now, looking at the future prospect of premiumization, Hero still has close to 80% market share in the population of entry-level motorcycles, and inherently, Hero has been a strong customer base who will upgrade in the future, who will upgrade in the future. Extreme 125 has been a success, but it was more of a catching up with the competition. How do you plan to capitalize on your strong base and gain market share in the 125 cc segment over the next five to ten years? That would be my first question.
Can I take that, please?
Yes.
Yeah. Ashutosh, please take that.
Hi, Vipul. Thank you for the question. We've had some very strong gains in the 125 cc category this year. On a full-year basis, we gained close to 250 basis points in terms of market share. Xtreme, as a brand, if you see, only on 125R, we sold close to 300,000 units. Overall, Xtreme portfolio, since it's been there, is touching close to 500,000 units already. The kind of response that we have received on the product also gives us a lot of confidence that this brand overall will become much stronger. The more recent launch of Xtreme 250R has also met with some amazing response. We're very confident that it's on the way to become a power brand in itself. 125 cc, we have been a very strong, dominant player in this category over the years.
We are recovering very strongly, and last year is a testimony of this. We have exciting product launches that we have in this category, which will make us even stronger. We are confident that we will gain share and move towards leadership.
Are you suggesting that we will be looking at more product launches in the 125 category in the near future?
Yes, as per market need, we have an exciting product lineup that's planned for the future.
Okay. Thanks, sir. My second question pertains to the vehicle quality. Again, it's from feedback from the last five years, post VSX. The feedback we got from the channel checks is that, of late, there have been some issues with the quality, and although a lot of issues have been addressed in the past, like within two years or three years of launch of the VSX models, Hero is known for its quality in the entry level. The second feedback we got was that when we started in 2017-2018, we started with Innovision Plus margin expansion program, but eventually, what we realized is that it eventually moved only to the margin expansion, while there was some degradation in the quality which happened. That is also reflected in kind of warranty when it's coming to the dealers. How do you plan to address?
We are now seeing that changing leadership is also happening to the company. Is there any way we can track improvement in the quality and the brand value of the models?
Yeah, I'm going to take that. Sure. Hi, this is Ram here. I'm the Chief Operating Officer at Hero MotoCorp. To answer your question, firstly, we pride ourselves at Hero at having products that work for our consumers and last with our consumers over many, many years. The quality of our products is paramount to us, and our brand is built on the strength of the incredible value and quality that we've delivered to our customers over the years. We have not seen a drop-off in any of those levels, and we pride ourselves in making sure that the products that leave our factory and go to our dealerships and go to the hands of our consumers have quality levels which are of the highest level in the industry. We continue to maintain that standard. We will not allow for any drop-off on that front.
I must say that all of our products in our portfolios have seen the strong reception that they have because of the quality levels that we maintain with them.
Generally, going forward, we are using technology for our development of our products in the R&D and addressing all quality issues at 360 degrees, whether it's the quality of customer experience, quality of manufacturing, and quality of design. All the areas we are strengthening ourselves very well.
Sure. Thank you, sir. Thanks for that.
Thank you. We have a next question from the line of Chandramouli from Goldman Sachs. Please go ahead.
Hi, good morning, and thank you for taking my question. My first question is based on the comment you made earlier around mid to high single-year growth in the industry. Just want to clarify that that's volume growth for the industry. Just as a follow-up to that, if you're able to share what Hero's expectation is for FY2025 in terms of volume. Historically, I think you've spoken about revenue. Just want to understand those in a little more detail.
Hi, Chandra. If I got your question right, you're wanting to know a little bit more on what our projections for the industry are and how Hero is thinking about its volumes?
That's right. That's right.
Okay. Thank you. Thank you for the question. So, overall, this year, we expect the industry to grow in the region of around 6-7%, pretty much the same as last year. I mean, we have a lot of tailwinds this year. We have a good monsoon prediction. We have a good marriage season after a long time, and the initial signs are already visible. We've seen some income tax relief that should put in more money in the hands of consumers. There's a lot of government spending that's happening. I mean, the inflation is lower. We expect the industry to be better that way. Of course, there are a little headwinds as well in terms of what's happening in terms of OBD2 and the price increase that's happening therein. Overall, we expect the industry to be in the region of around 6-7%.
We, on the other hand, are very confident of our performance. We have some launches that happened in Q4 that are yet fully to manifest in terms of volumes, and we are very confident that we will outpace the industry growth and gain share.
That's helpful. My second question is just around channel inventory. I think in a few prior remarks, we did mention that we did some scheduled maintenance at some of our key plants in the month of April, which has caused retail growth to exceed wholesale growth, specifically for the month, by a decent quantum. I just want to understand now, after that event, where we would be in terms of channel inventory in maybe a number of weeks. Are we at four, five, six weeks? I just want to understand that also.
Chandra, up to date, I mean, we were sufficiently covered. Our channel inventory currently stands around four to five weeks, but inventory is always forward-looking. We know that as we gear up for the festive season, we will be able to step it up in accordance with what we expect out of the festive season. We are sufficiently covered in terms of inventory, currently at four to five weeks.
All right. That's helpful. Thank you very much, and all the best.
Thank you. We have our next question from the line of Amyn Pirani from J.P. Morgan. Please go ahead.
Yes. Hi. Thanks for the opportunity. My first question is also on this inventory. Should we understand that four to five weeks or maybe four weeks is kind of a normalized level that we are looking at going forward? Some sense would be important. Secondly, you mentioned that you had done a lot of launches in Q4. While, obviously, the wholesales were corrected and retails are picking up gradually, any initial sense if you could give as to what is the response to maybe the Destiny 125 or the premium motorcycle that you have launched and what kind of numbers you are expecting to ramp up over the next few months?
Hi, Amyn. Thank you very much. Good to hear you again. Hope you're doing well. Overall, from, I mean, if you look at the performance for last month in terms of VAHAN registrations, we had crossed 500,000. We are increasingly focusing on retails as the key metric for performance. A channel inventory of anywhere between four to six weeks is the normal level that we would want to operate in. I mean, depending upon the season, we might just take it up a little notch but subsequently come back to the same levels that we want to operate on. As I said, we've launched some products in quarter four, met with some amazing response. You would have seen our scooter market share inching up by almost 140 basis points basis the new launches that we've had. We also have launched the Xtreme and XPULSE.
The order pipeline, booking pipeline, sorry, is extremely strong. As I said, they are yet to manifest fully. As we move into quarter one and towards the festive, we will see this taking full shape and confident that these will help outpace the industry in terms of growth.
Thank you, Ashutosh. Good to hear from you as well again. Second, I had a question on the numbers. We have been sharing this investment into EVs and what it does to our overall margins. Thank you for sharing that. Is there a broad target as to by when we would want these EV losses to maybe turn breakeven? Is that a target, or is that not something that we should be thinking about at the current stage?
Thanks, Amyn. Vivek here. No, you are absolutely right. I think clearly, yeah, I think you are right. We have been transparent in terms of sharing the numbers. Absolutely right. I think this year, if I really look at our EV performance, our volumes have grown 200%. And our EBITDA for EV business is at minus 95%, which, when I compare with our performance in 2023-2024, has improved from 155% negative to 95%. As we really look forward, our priority is very clearly to grow volumes, to scale up the business, and to really grow market share. Right? Having said that, we will continue to improve on our profitability as we go forward. If you are really asking me in the near term, is there that I am really looking for? As I said, I am really looking for growing volumes, scaling up, and market share.
Having said that, I continue to really drive the business with a lot more efficiency. Right? What will really make this business profitable is the scale-up, which we talked about, the BOM cost reduction through localization, right, PLI benefit realization. Right? These are the things which will really help me improve the profitability of the business going forward. Also, what I want to really add is that at a 25,000-30,000 levels of volume per month, we hope that this will break even, which, in our view, is a couple of years away.
Okay. Okay. Understood. Thanks for that, Chandra. I'll come back in a bit.
Thanks, Amyn.
Thank you. We have our next question from the line of Pramod Kumar from UBS Securities. Please go ahead.
Yeah. Thanks a lot for the opportunity, sir. My first question is on your guidance on outperforming the industry. The reason why I'm asking this is we had the same optimism and sentiment last year. We probably claimed to have the best launch pipeline, and the retail growth for the industry was 8%, and we grew our retails by 1%. What gives you the confidence that this year, with slightly lower industry growth and not as actionable launch pipeline as last year, how do we expect to kind of outperform the industry on retail growth? Linked to that, what would be the linkages of that on the margin aspirations as well? If you can just help us understand why we have kind of underperformed the industry last year so badly and why are we so confident of, as in, overcoming all of those and outperforming the industry?
What are you seeing on the ground, and what are the likely read across of margins from that strategy?
Sure, Pramod. Thank you. I'll let the margin question be answered by Vivek, but allow me to come back on the first part of your question. The confidence comes from the delivery that we've had in quarter four. If you look at the performance that we've had in quarter four, in the entry category, we gained 600 basis points in terms of market share. The confidence comes from the fact that over the year, we have recovered on 125 cc strongly, gained 250 basis points there. The confidence comes from the fact that the new scooters that we have launched in the market have met with some amazing response. It led to an increase in market share in the later part of quarter four and also retail growth.
That said, we are also working on, as industry leaders, we know in the core category, our work is to expand the category. The fact that we have 100,000 customers reporting into our workshops every day gives us an excellent opportunity to work on upgrades and own-based marketing. These are fundamental strengths that we have that we will increasingly leverage this year. We are very confident this will help us move in terms of market share, outpacing the industry growth.
Yeah. So, just following that up, India business, therefore, the rural recovery is well underway. That makes the number of new launches, India business growth. You've also looked at our export growth, Pramod. That is double the industry export growth as well. Our emerging mobility business unit, our EV business has grown far ahead of this total rate as well. So, when you looked at this, every month, sequentially, there is growth when you look at VAHAN. That is where we are coming back from to say that there is an opportunity that we are starting to—all the building blocks are in place. We now need to implement, and that's what Mr. Kasbekar talked about.
Yeah. Thanks, Umang. Hi, Pramod. Vivek here. I think, as Ashutosh and Umang said, I think we had a great start, I will say, to the year. I think we are gaining VAHAN share for the last four months in a row. I think the growth is clearly broad-based. We are seeing that in our Indian business. We are seeing it in global business, and we are seeing it in the EV portfolio. Right? Having said that, on your second question on margin, I must start by saying that we will continue to invest behind growth. We have given a guidance to the market of maintaining our EBITDA margins between 14-16%. Directionally, we will be there.
Sir, when you talk about market share, you're talking about YOI market share trends or sequential market share trends? Because it's a seasonal industry, as we all know. Because when I look at VAHAN, the YOI market share, there's been a decline since January to April. Correct me if I'm wrong there, please, unless you're referring to sequential market share. Am I right?
Referring to sequential, Pramod, but also.
Okay. Fair, fair, fair. Yeah.
I mean, I think May is translating into YOI as well.
Okay. Out of five months, four months, it's a sequential gain. Year on year, one month. Okay. Fair enough. I look forward to that outperformance. Last question, the leadership transition. If you can just help us understand how are we placed there as to, because there has been reasonable attrition at the top. Just trying to understand by when do we expect to have a full-time active CEO at the company?
Yeah. Thanks. Thanks, Pramod. I'll ask Vivek to take that.
Pramod, right? Mr. Kasbekar, he's the acting CEO, and he's fully on the job, right? He's the one who's currently driving the business. We'll come back to you as we have more to share.
Thanks a lot. Thank you. Best of luck.
Thank you. We have our next question from the line of Sonal Gupta from HSBC Asset Management. Please go ahead.
Yeah. Hi. Good morning. Thanks for taking my question. First, I just wanted to get a sense on the non-vehicle revenue part for this quarter. I mean, even adjusting for spares, right? Our ASP is sort of looking much higher on a sequential basis. Could you just highlight, are there any other larger amount of non-vehicle revenue or any other stuff which has sort of boosted the revenues for this quarter?
I think large part, there is a revenue per unit growth of almost 4% year on year. That is largely driven by two-wheelers and parts business. Right?
Okay. Okay. On a sequential basis, our ASPs are big time. Is that just a mix effect, or are there some other drivers there?
Yeah. It's largely the mix effect. Yes, you're right. We've increased our revenue per unit both year on year and quarter on quarter. Specific to your question on quarter on quarter, which has increased by INR 2,236. Right? It's largely the two-wheelers contributing to two-thirds of it and the balance coming from spare part business.
Okay. Just to add a thing on, we had this production issue and somewhat uncharacteristic for Hero. Just wanted to—I mean, could you give some more color into that? Was it some supplier-related issues in which sort of this related led to the disruption or—I mean, because we had three plants down. I'm just trying to understand.
Sure. This is Ram. As you know, last month, we had a planned production halt at four of our factories in Neemrana, Gurugram, and Haridwar. The primary driver was to realign the supply lines, but also, we had scheduled maintenance, and we made some infrastructure investments and upgrades that we wanted to. This did go on to impact, unfortunately, some of our dispatches in April. I am happy to share that we are at full strength in May. There was no real retail impact, but I will let Ashu maybe speak to the retail impact of that shutdown.
Of course, I said this before. Last month, in April, we clocked over 500,000 in VAHAN registrations in spite of last year, April, being heavy in terms of marriages and festives. There has been no retail impact whatsoever. We are sufficiently covered. As it improves going further, we will be sufficiently covered for the festive as well.
Got it. Just two more questions. I'll just put them in one line. One was on the financing side. I mean, we're getting some mixed responses in terms of where the, I mean, two-wheeler financing is becoming tighter, especially given the entry-level portfolio that we have. Are we seeing any of that? Also, if you could give some more color on what is the export outlook for FY2026. Thanks.
Yeah. Hi. I just wanted to quickly come on the financing side of the business. So, overall, our retail finance penetration for the quarter four was in the region of 59%. For the full year, it was at 63%. This is a seasonality that comes into retail finance pretty much in quarter four. We were at the same level last year. At the penetration level, we have not seen an impact. Yes, the nature of the products has changed a little bit because of certain stress that some of the financiers have seen. I guess there is a lot of innovation that is coming in there in terms of different kinds of schemes that are available. I think with the easing of interest rates, we expect low EMIs to become a larger part of the overall basket of products.
Again, as I said, seasonality, fundamentally, nothing that we should be too wary about.
Just to add to what Ashutosh said, I think our finance penetration currently is around 65%, almost in line with last year. We have not seen much of a shift there. Right? Just to add.
On the global business, our strategy of making products specific to countries in LatAm, Bangladesh, Nigeria is yielding very good results, which is evident from the last year's performance. Going forward, we are quite aggressive on the growth in the GB segment.
Yeah. To add and to supplement, I think this year, we had a fantastic performance of growing two-export industry. I think clearly our 80/20 strategy is working well. Our top 10 markets continue to grow well. We have re-entry in Nepal, entry in Sri Lanka and Philippines. That is really going to contribute to our growth as we get into 2025/2026. We are really confident about growing our global business and continue to gain market share in 2025/2026.
Got it. Thank you.
Thank you. We have our next question from the line of Kapil Singh from Nomura. Please go ahead.
Yeah. Hi, sir. Can you let me know what is the spares revenue for the quarter?
It's INR 1,553 crore, which has grown by 11% year on year.
Sir, this has been growing quite well for the last few years, actually. Could you share some insights here on what is driving this growth? In fact, the growth has been well ahead of the volume growth that's happening.
Yeah. Yeah. Hi, Kapil. Thank you very much for that question. I mean, parts business growth has something that we have looked back to describe over the years. In fact, there is a lot of fundamental work that has gone into where we are today. I mean, there is a lot of work that has happened in terms of scaling up the networks. We are much more deeply penetrated today than what we were earlier, especially in the aftermarket. We worked also at our existing workshops, but more so in the aftermarket, where we have penetrated deeply. We have expanded our portfolio. I mean, when it comes to accessories, we've added new product lines like the tires and the batteries. All this adding up to the consistent performance that you are seeing today.
Also, to add to what Ashutosh said, while we had a good track record of almost hitting double-digit growth, and that is what certainly we are looking at as we look into the current year, while we look to really grow this business, we continue to grow this business profitably is what I wanted to add.
Okay. Thanks, sir. Second, I wanted to check on Vida. Where are we in the PLI approval cycle?
For Vida Pro, we have just filed our PLI application. I think we expect the approval to come in by July. I think other products, we are in the process of filing the application.
Okay. Great. Sir, also one question I had on Euler Motors. We have taken a 34% stake there. Could you share some thoughts here that why not a majority stake if you are looking at this as a new segment that you want to enter?
Yeah. I think you're right. We acquired a 34.1% stake in Euler Motors. First of all, what I really want to say is that three-wheeler presents an attractive alternate adjacent category for us to really diversify, which is part of our strategy. I think we've talked about it in the past, right? I think as a category, it offers us a large value pool, right? It's a segment in terms of size. Revenue size, it's INR 17,000 crore in the last financial year, 640,000 units. This is projected to grow to INR 22,000 crore in the next five years. Also, it provides an attractive profit pool of INR 2,300 crore. This category has an EBITDA margin of 20% plus. Yeah. We are seeing rapid electrification in the three-wheeler category, and we believe this is the right time for us to really enter, right?
I think this category is driven by favorable government policies, TCO benefit versus diesel of almost 40%-50%. Current electrification at 22% offers headroom for all of us to really grow our share in the respective categories. Right? At this point, I think if you really look at our investments in the past, supporting the enterprise in the long term has really created value for us like we've done, say, in the past. We strongly believe that this model, which has worked in the past, will continue to do well for us going forward in case of Euler Motors.
Sure, sir. Thank you.
Thank you. We have our next question from the line of Gunjan from Bank of America. Please go ahead.
Yeah. Hi. Thanks again for taking my questions. I had a few clarifications. On the ASP increase quarter on quarter, which you covered earlier, is there an element of OBD price hike that's captured there? If you can sort of just quantify that.
OBD2 price increase, yes, we've taken almost 2%, which is almost the case in the industry. Gunjan, this is a similar price hike across the industry.
Yeah. If your question is how much of that is baked into the Q4 numbers, the Q4 numbers have very little of it because this was phased out over the months and model on model. Very little impact in the Q4 ASP increase.
Yeah. Yeah.
Okay. Got it. The large part of ASP is essentially mix because when I look at the entry executive, etc., mix, that's not changed materially. Is it within the models that what we are selling is probably higher variants or higher price points within that? Is that the way I should be thinking about ASP because it's actually seen quite a meaningful increase over the last couple of quarters. I don't think it's just quarter four, but right from Q1 to now, there has been quite a step up in the ASPs.
Yeah. So, you're right, Gunjan. I think compared to last year, our ASPs have grown by 4%. And as I explained earlier, large part of it is coming from mix improvement within the segments, product segments, and a part of it from price. So, two-thirds coming from mix and one-third coming from price. By and large, I think that's what you can really take. And as we clarified, OBD2 price increase is something which is effective. April, you will see the impact of that in quarter one.
Okay. Got it. The other clarification that I was looking for was this difference between the sub-brand associate profitability, which is quite decent in this quarter, I think roughly around INR 80 crore or so. Can you just share some color on what this has been in losses for the last couple of quarters? What's really contributing? Is there a one-off here or any turnaround in the associates that's captured there?
Gunjan, you will have to re-clarify the question. Just be more specific on for the quarter or for the full year, what is the question?
It is for the quarter. If I look at the subs contribution, which is, I think, captured as profit from associates in the consolidated P&L, that's actually a positive number, a reasonably positive number, I think INR 70 crore or so, which has been in losses for the last couple of quarters. We're just trying to understand what's really changed there, or is there some back to market or something there?
Yeah. Yeah. You're right. Let me just explain that. You're right. The number has always been a lower number. At this time, we had a one-time gain of CCPS conversion to equity, right, in case of ASP. That has translated into a one-time gain of INR 170 crore. That's the one which has really inflated the profitability in our consolidated results for the quarter and for the full year.
Okay. Got it. That is clear. Last question on the EV.
Sorry to interrupt, ma'am. May I please request you? You have two questions that are.
Okay. All right. Thank you so much.
Thank you. We have our next question from the line of Amit Kiranandani from Philip Capital. Please go ahead.
Yeah. Thanks for the opportunity.
Thank you.
See this margin improvement journey in the coming two to three years, and do you see any risk due to rising EV and export mix?
I do not see a risk. I think this is a very conscious investment the company has decided to really make, right, in the next, I will say, couple of years, near to a middle term. Right? I do not see a risk to that. I think what is important for us is to really scale up the business, scale up the business fast, grow it profitably. Right? We will continue to grow our business and reinvest in EV. I think that is the strategy. Therefore, our margins will continue to be in the range of 14%-16%.
Great. In the first two months of this fiscal, and your outlook for these urban-rural separately for this fiscal year?
Amit, hi. I mean, what we expect this year is, of course, the earlier answer that I had given, the prediction of a better monsoon, a good marriage season, increased government spending in the rural areas, lower inflation. All that we expect will work in favor of rural. I mean, our rural contribution is in the high 50s. We expect that to be as strong. In fact, expect good rural growth coming in this year overall. Also, just wanted to add here that, I mean, we are very confident since we have a product lineup that's strong in some of our base categories. As the segment grows bigger, we'll be able to outpace in terms of the industry growth as well.
If I can tell you, asking on net worth of Hero MotoCorp, please, as on 31 March, please. That's it. Thank you.
We'll take that offline, Amit. Yeah. We'll share with you separately that number.
Yeah. On the list. Thank you so much. Thank you.
Thank you. Thanks so much. Thank you.
Thank you. We have our next question from the line of Raghunandan from Nuvama Research. Please go ahead.
Thank you, sir, for the opportunity. Firstly, on the 100cc motorcycle, the industry volume and Hero volume has seen some decline in the last two quarters. How do you see the volume expectations for this segment going forward? What are the drivers?
Raghu, hi. I mean, for the 100cc and the entry category, of course, there was, for the last few years, stress at the bottom of the pyramid, which is why this segment had probably seen a little more stress than some of the other segments. Quarter four, I mean, we had seen an impact across categories, not only in EVs. I mean, if you look at the delta shift from how these segments were growing versus how quarter four behaved, you saw a blip across categories. We really can't single out the 100cc category just by itself. That said, I mean, we are a very dominant player in this category. In the 100cc, we operate with almost a 90% market share. Year on year, we have had a 600 basis points increase in terms of entry market share.
Here, our job is to expand the category, and this is where we are going to be indexed upon. I mentioned in my earlier comment that we have the largest base of customers. We have almost 40 million customers visiting our workshops every year. There is a lot of phone-based work that can possibly happen here in terms of upgrades. There is a lot of finance-related actions that we continue to do, and there are innovations, especially in terms of digital finance that we are trying to bring about, which will make affordability and inclusion much easier. We are confident that this segment, on the back of rural coming back much stronger this year, will do well and help in overall growing of the 100 cc industry led by us, of course.
Thank you, sir. Secondly, in terms of the new products, if you can talk a bit more about on the EV side, products like VIDA V2, when can we expect these products, and any other launches you want to highlight for 2026? Thank you.
Okay. Our existing product has been received very well, and you can see the volumes are anywhere going from 7,000-8,000 on a monthly basis. Very shortly, we are launching an upgrade, which will be far better in terms of the value proposition to the customers. It will come with a launch in July. Of course, that will be addressing the basic customer requirements across the segment.
Yeah. So, yeah, just to add, on the new launches, I think there is clearly, as we talked about, I think we had a great exit to the year. We exited with a market share of 6% plus. I think the launches we had in the second half of last year, they continue to do well. In addition to that, we are planning two new affordable products in first half, most likely in July. That will continue to really strengthen our product portfolio, which will help us really drive our growth, accelerate our growth, and help us gain market share.
Thank you, sir. Both the affordable products will be in the EV side, right?
That's right. We are talking of EV units. Yes. That's right.
Yeah. Lastly, how do you see the collaborations, synergies playing out with your partners in terms of the ASR, Zero Motorcycles, or Euler? How do you see that joint efforts happening, and how can it benefit the company over the near term, medium term, if you can talk about it?
Yeah. I think very clearly on the ASR side, I think clearly it's a long-term investment we've made. I think we really like the enterprise, and we really continue to stay invested in that. Euler, it's just the start of the relationship I briefly talked about. It's a very exciting category. It's a very exciting business. I would say we have a very experienced team in Euler, right, which is a very good mix of young professionals and experienced from industry. Right? We have a very differentiated product, right, to offer in the marketplace. We are really excited working with the new team as we really go forward.
We have the synergy with Ather on the charging infrastructure. We are sharing the same. Added to that, on Zero front, it is the technology at the higher voltage, which is what we are absorbing, which will have a very good future as the time passes.
I think we're all good.
Thank you.
Thank you. We have our next question from the line of Mineer Bhora from EQS. Please go ahead.
Yeah. Thank you for taking my question. My question was on HF Deluxe. Basically, if we see the XY19 volumes and compare it with XY25, the HF Deluxe has seen a major drop here. While your Splendor has been something which is sort of flattish, or has it grown? What is it that the HF Deluxe demand has been so impacted? Are the customers moving to Splendor, or can you throw some color on it?
Mineer, hi. Thank you for that question. In fact, what you witnessed from FY 2019 to FY 2025 in the middle of that was a huge disruption that happened in the industry. There was COVID, which impacted disposable incomes to a great extent, and also BS6 transition that happened, which increased bike prices substantially across categories and across all industry players. What we saw was a lot of customers at the bottom of the pyramid coming under a large affordability stress. Used two-wheelers, for example, which used to be 1:1 of used two-wheeler sales post-COVID, immediately post-COVID, actually rose to close to 1.5:1. I mean, there were a substantial number of people who held on to their bikes longer. Our workshop data suggested that people owning HF Deluxe were not replacing as frequently as they were earlier. We had vehicles in our workshop five years and above. It increased significantly.
We knew all the while that it was just a matter of time before it would come back. We have invested aggressively in terms of augmenting the value proposition of the product, bringing in new exciting additions in this category. We have already seen it started to work for us from the last quarter of the financial year. Last quarter of the financial year, we also saw the replacement demand coming back significantly from almost 6% to 11% in quarter four sequential. We are very confident that as we bring more excitement into this category, we will see a lot of customers who have dropped out from the mobility space coming back and opting for this. Our quarter four performance is an indication of that.
Just to check in on this, the replacement number which you quoted, that's being around 11% of the total. Is it of the total volumes, or how do you see it?
Yes. Total.
The replacement. Okay. Going ahead with the FY 2018-2019 base being so high, do we expect this to go up, and to what level does normally the replacement demand peak at?
We've seen replacement demand to be in the vicinity of around 18%-20% generally. We expect that it will gradually bounce back to that level. Of course, it will also depend in terms of the innovation that people are able to bring about overall across the industry in the categories for people to be tempted enough to upgrade.
All right. Okay, sir. Are we seeing some kind of customer moving from the HF Deluxe towards scooter segment or some kind of data which we work on? Do we see that shift towards scooters yet?
The category drivers for both of these segments are very different. I mean, scooters are largely into a different space altogether. I mean, the average running is much higher. I would not want to draw that conclusion.
All right. Okay, sir. That was from my side. Thank you.
Thank you. We have our next question from the line of Pramod Amthe from InCred Equity. Please go ahead.
Yeah, hi. Thanks for taking my question. In the recent context of your supply chain realignment shutdown which you've taken, I wanted to understand how do you see new plant capacity versus the old plants because your plant seems in section almost like 20-plus years on. Is there a scope to shift the production and bring those operational efficiencies and think through beyond having that 14%-16% margin?
Okay, I think there were two particular questions around either of these ones. To start with, as we mentioned, we did temporarily halt production in four factories for three days. We, as I said, are back at full strength in this month, and we do not see any issues going forward. With respect to the second half of your question, which is more around the new factories that we have, we are ramping them up quickly. Our last factory that we started, which is in Tirupati District, which is where we produce our EVs today, is ramping up and ramping up very well. We have already also announced that we will invest significantly in that site to bring up a second local park center. That campus will be one of the larger campuses that we have in our network in the future.
Is there a broader thinking in terms of re-aligning your capacities so that you can get the best of the latest production technologies for your profitability?
We do that on a continuous basis. I can assure you that we are constantly looking at the mix, the different models that we produce across the different sites that we have. One of our largest strengths is the manufacturing capacities that we have in the supplier ecosystem that supports it flexibly. We will look at this on a continuous basis. Just to reinforce what Ram said, even our older plants have the latest of the technologies, and we continue to improve upon the manufacturing technology.
Sure. The second one is investment into some of the new ventures. You have been right in catching up the wave and nurturing some of the best entities within those, either if you look at Eurofin Corp or ASR to that extent. How do you look and you avoid the temptation to book profit in the IPOs? How do you see the monetization? Would you look through for maturity of these industries to get out, or would you look for the right time to make the best buck? How do you look at monetizing the same?
Pramod, as you rightly said, these are long-term investments, right? We will continue to really invest and work behind these enterprises, support the management, and create value in the long term. That's all I will say at this point in time.
Okay. Thank you, sir.
Thank you. Thank you, everyone. To reiterate, highest ever revenue and profits for the year. We've been growing market share on VAHAN sequentially every month in this calendar year already. Happy with that, as you could see from what you're hearing from us. Increasing dominance in entry, and as that market share has gone to 65%, up 6% growth year on year. The growth in the 125cc segment with product interventions, process improvement is something that's been helping us go forward. What will support this growth is premium and scooters as well. To your question on mix, as scooters and EMBU EV does better, the new launches in this category have us excited with the Zoom franchise, Xtreme, XPULSE, and the Premier dealerships as well. Global business has had a great year. We exited the year with 9% market share. We continue to outperform the industry.
You'd be pleased, 40% of our exports are actually premium products. Closing with EV with 20% and more market share in 60 of our towns already. The focus on market share expansion, network, new products, and brand building is what we are doing. With that, thank you, everyone, for coming in. Jai Hind, please keep safe.
Thank you.
Thank you very much.
Thank you. Thank you.
Thank you, everyone. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.