Ladies and gentlemen, good day, welcome to the Hero MotoCorp Q4 FY 2026 conference call hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniket Mhatre from Motilal Oswal Financial Services Limited. Thank you. Over to you, sir.
Thank you, Swapnali. Good morning, everyone. Welcome to the post-results conference call of Hero MotoCorp. I would like to thank the management team of Hero MotoCorp for giving us an opportunity to host this call. I would now hand over the call to Sarthak from the investor relations team of Hero to take this forward. Over to you, Sarthak.
Thank you, Aniket and Swapnali. Good morning, everyone, and welcome to our earnings call. With us on the call today, we have Mr. Harshvardhan Chitale, our CEO; Mr. Vivek Anand, our CFO; Mr. Ashutosh Varma , who is the Chief Business Officer of the India Business Unit; and Ms. Kausalya Nandakumar , Chief Business Officer of the Emerging Mobility 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.
Thank you, Sarthak, good morning, everyone, and welcome to the Hero MotoCorp's earnings call. I'm sure that by now all of you must have seen our strong Q4 and fiscal year 2026 results. FY 2026 was a very strong year for us, where we delivered our highest ever top line and bottom line while maintaining our leadership as the world's largest two-wheeler manufacturer for 25 consecutive years. In the previous investor call, I spoke about opportunities that exist in the fast-growing segments of the two-wheeler industry, where we are relatively under-indexed, under represented. I also spoke of how we are focusing on them with a clear objective of rapidly gaining share in each of them. It's heartening to see the results already coming through. In these focus segments, we've seen advancement in last quarter.
In scooters, we saw 48% growth year on year. In EV, our EV scooter volumes expanded 2.5 times over the previous year. Our global business wholesale or dispatches saw growth of 41% year on year. Even in the premium categories, as you all know, we have partnership with Harley-Davidson for a certain range of motorcycles, and our Harley-Davidson range of bikes that we sell, or make and sell, grew 26% year on year. What's also important to note is this is not just dispatch growth. Our retail performance actually outpaced dispatch growth. What that means is channel stock came down over the year, and we are entering next year with much more healthier channel stock levels. We continue to strengthen our portfolio in FY 2026 with 9 impactful launches and multiple key refreshes, both in our ICE as well as EV portfolio.
You all have probably also seen our 6 high impact marketing campaigns, and one of them is already going on right now, which is around our Xoom scooter portfolio. Combined with these high impact launches that we did last year, we have now filled critical white spaces both in our motorcycle as well as scooter lineup. All of this translated into market share gains across 100cc, 110cc, ICE and EV scooters, global business, and as I mentioned, even in the Harley-Davidson range, the 400cc-500cc range where we play. In Deluxe 125 segment, we did have a dip in the very first quarter of last financial year, but thereafter, for 3 quarters, we've been gaining share quarter after quarter. Going forward, our investments in these growth segments will continue.
We are investing in capacity expansion. We have committed over INR 1,500 crore of CapEx in FY 2027. This CapEx is going to expand our capacity in scooters, where for some of our models that are doing very well, we are doubling our capacity. In EV, where in fact, in a matter of a month, we would double our capacity from where we started last year. Further down the road in few quarters, there'll be further doubling of capacity as we are seeing great momentum for our Vida brand. We are also making significant investment in building up a second parts center, which is going to help in further expansion of our parts and accessories business. We've committed over INR 700 crore of investment in building out a global parts center in south of India.
Second kind of investment that we are going to continue doing is in brand building. Last year, just to call out, we increased our advertising and promotion spend by 22%. While our overall costs were controlled, and you saw its impact on our EBITDA expansion in the year, despite that, despite that cost control, we had a significant brand building investment that we did last year, and we would continue to do so this year as well. Third major investment that we'll be focusing on this year is new products. In addition to nine launches that we did last year, you should expect from us this year many new exciting launches, both in our Vida brand, in our premium ranges, and also in scooters. We continue to have new products coming in quarter after quarter, and stay tuned for that.
Fourth area of investment that we are driving, as an organization, it's a priority for us, is on technology. We are committed to our continuous investments in low emission powertrains, be it for electric vehicles or also for flex fuels, different blends of ethanol. We are also making investments in making more and more of our vehicles now connected. Already, all of our electric vehicles and premium range of motorcycles and scooters are connected, over 3 lakh of two-wheelers that are on the road today are connected to our cloud platform, where we can monitor their performance, give rider guidance, such as turn-by-turn navigation, diagnostic information. We are also continuing to make investments in digital technologies.
You will be glad to know that we are now increasingly leveraging GenAI for improving our customer conversion in our customer-facing platform and also in reducing our cycle time of development. All of you must have also heard about new appointment that we announced yesterday, which is that of our new CTO, Mr. Sachin Agarwal, who would be joining us later this month, and he brings with him 29 years of experience in automotive R&D and technology leadership. I am confident that under his able leadership, Hero MotoCorp will accelerate its R&D transformation and build additional differentiated future-ready technologies. While we are all focused on these growth drivers, we remain mindful of the evolving macro environment. As FY 2027 begins, the broader economy is navigating certain short-term uncertainties due to the developments in West Asia.
That has impacted the entire industry in terms of commodity costs, be it cost of metals, cost of gas, or in the recent past, also we've seen it increase in certain labor costs. Despite all of these headwinds, I'm pleased to report that we navigated our supply chain with no disruption at our plants as well as our suppliers, reflecting resilience and strength of our operations. On the demand side, two-wheeler sector has started the year on a positive note, continuing the momentum that we saw in the second half of FY 2026. With this, let me hand over to Vivek for a more detailed review of our quarterly financial performance, and then we'll throw the call open for Q&A.
Thank you, Harsh. Good morning to all of you. I would like to thank everyone for joining the call today. I'm pleased to report a strong financial performance for Hero MotoCorp for the fourth quarter and the full fiscal year 2026. Regarding our Q4 FY 2026 performance, the company achieved its highest ever quarterly revenue of INR 12,797 crores, representing a 29% year-over-year growth. This top-line momentum contributed to robust operational results, with EBITDA reaching an all-time high of INR 1,856 crores, up 31% year-on-year, and PAT reaching INR 1,401 crores, up 30% year-on-year. ICE business EBITDA margin in the quarter expanded by 100 basis points year-on-year to 17%, driven by pricing, LEAP savings, and operating leverage.
After taking into account the investments behind EV business of INR 220 crores, the overall EBITDA margin improved by 30 basis points to 14.5%. Coming to the performance in FY 2026, we achieved highest ever revenue, EBITDA, and PAT. Revenue stood at INR 46,830 crores, growth of 15%. EBITDA, INR 6,871 crores, growth of 17%. PAT, INR 5,268 crores, growth of 14% year-on-year. The ICE business EBITDA margin in FY 2026 expanded by 90 basis points to 17%, driven by pricing, LEAP savings, and operating leverage. After taking into account the investments behind EV business, the overall EBITDA margin improved by 30 basis points to 14.7%. Additionally, the average selling price in the quarter increased by 3% quarter-on-quarter across the product segments.
I'm happy to inform that the board has declared final dividend of INR 75 per share, taking the total dividend in financial year 2026 to INR 185, our highest ever dividend. With this, we maintained our consistent dividend payout of 70% plus. Our focus on cash management resulted in strong cash flow from operations, which stood at INR 9,395 crores for the full year 2026, an increase of 80% year-on-year, driven by working capital improvements. While operating momentum remains strong, the industry is currently facing commodity headwinds that began in March. We expect a transitionary impact on margins in the short term and are mitigating this through calibrated price increases and an accelerated LEAP saving program. We remain committed to our medium-term margin guidance of 14%-16%.
Looking ahead, we will continue to invest in capacity expansion, brand building, and our premium scooters, EV, and global business portfolio. We also remain committed to enhancing customer service through Hero 2.0 and Premia. We are confident in the growth prospects of the two-wheeler industry and anticipate high single-digit growth during the current fiscal year. With resilient demand and upcoming product launches, we expect to grow ahead of the industry. Thank you. I'll now turn the call over to Sarthak to open the floor for questions.
Thank you. We can start with the Q&A now.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and then two. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants, you may press star and then one to ask a question. We will take the first question from the line of Binay Singh from Morgan Stanley. Please go ahead.
Hi, team. Congrats on good set of numbers. My first question is on your volume outlook. Could you share your thoughts on motorcycle industry volume outlook that you expect and for yourself also for FY 2027, and which will be the key models driving that growth?
Thank you, Binay. Thank you for your question. As Vivek mentioned, industry expects high single-digit volume growth in FY 2027, and it's a combination of both, growth in motorcycles as well as scooters. Having said that, we do expect scooters to grow a couple of point more than motorcycles. High single-digit with little less motorcycle, more in scooters. Looking at our success of some of the new launches and the plans next year, we do plan to outgrow industry both in motorcycles as well as scooters.
Uh-
Sorry, go ahead.
Any key models to watch in that which will drive motorcycle growth for you?
We do have multiple launches planned. I would not like to give out information ahead of our launches. You should expect launches across commuter, various high displacement bikes, different ranges of high displacement bikes. You should also see some great launches coming from us in Vida.
Thanks. Thanks.
I would not like to give specifics before the launch for competitive reasons.
Okay. Secondly, you know, in the opening remarks, you talked about headwind both on the wage side and the commodity side, and we are seeing aluminum almost hitting all-time high today. Could you help us think that, in the next few quarters, what is the quantum of headwind coming your way? What is the price hike taken? Are you hedged on some of these key commodities? Like, how should we think about the margin bridge, you know, in the next few quarters from where we are?
Yeah, Binay. Hi, Vivek here.
Hi, Vivek.
I think it's difficult to give a number, Binay. Let me start with that. Things are evolving as we speak. Things are changing really very, very fast. At an industry level, we are, as you rightly said, we are seeing commodity headwinds which started in March, right? We expect that there will be a transitionary impact on our margins in the short term. As management, we are doing whatever it takes to really mitigate the impact of that, which includes taking calibrated price increases and also accelerating our BoM saving programs, right? In the medium term, we are committed to our margin guidance of maintaining 14%-16%.
Binay, I think, reason we can't give any specific number, as Vivek said, is it's literally changing every day, every week, if you see the volatility. Hence, pegging to any number would be, taking a shot in the dark.
Just for FY 2027, do you think you'll be able to maintain this range that you've given, 14%-16%?
See, again, we are certainly committed to that. As we, as I said, the way things are evolving, it's difficult to really commit at this point in time that how the full year is going to be. What we can certainly talk about is the interventions, what we are really doing, right. We are certainly, as I said, we've taken a calibrated price increase in April, right. We are closely monitoring the market conditions. If there is an opportunity, we'll try to cover up more during the quarter and in the times to come, right. Certainly, internally, we have accelerated our cost savings program.
We are really looking at postponing some of our discretionary spends, cutting down on our discretionary spends to just make sure that to whatever extent we can mitigate in the short term. As a management, we are doing whatever it takes to mitigate.
Thanks. Lastly, on the EV losses, you know, quite sizable. Do you think they have peaked out? How to think about it in terms of at what volume do they start to inch down? Any comments on PLI? How to think about this EV loss number narrowing as the year progresses?
We are still in the phase of building out our EV portfolio. We still have many new launches planned in the year, and hence significant R&D investments are happening there. As I mentioned, we are also in process of big capacity expansion on EV. EV is still for us in a build-out phase, because if you see just about 7% of two-wheelers in the country today are EV, and there are many categories where EV penetration is very low. It's still a build-out phase for us, and we are committed to continuing to do that build-out. Coming to the second question on PLI, maybe Vivek you can give the specific-
No, Harsh, you are absolutely right. We are in an investment phase. When I really look at our performance quarter on quarter, the EBITDA losses per unit is actually coming down, right, at each quarter. Having said that, Binay, I just want to briefly talk about the 3-pillar strategy we have in terms of making this business self-sustainable. Right. You talked about PLI. Let me start with PLI. I'm happy to share that we now have PLI for 3 products, right, which almost cover 60% of our, of our portfolio. Right. We have plans during the year to go to almost 90% of our coverage. Almost it translates to 13% of revenue as the benefit.
You can work out that this could certainly help us in terms of achieving self-sustainability for our EV business. Harsh talked about scaling up the business because that's something really important for us to really, as one of the levers to path to profitability. We'll continue to scale up and invest in this business. The third thing I want to call out is the BoM cost reduction. We are working aggressively on driving efficiency, LEAP savings and better unit economics for our new launches. With all these three initiatives, we strongly believe that we will continue to improve the pro-profitability of this business quarter on quarter.
Thanks. Thanks, team, for the detailed response. If you could just end with EV revenue and losses for the quarter. That's it. Thanks.
Yeah. Binay, we'll possibly take this offline separately with you.
Okay. Yeah. Thank you.
Yeah.
Thanks.
Thank you. We will take the next question from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Yeah, hi. Thanks for taking my questions. Just continuing on the margin question that Binay asked, could you talk about the price hikes taken so far since the beginning of this year? Could you also share in the sense that all the price hikes that we've taken, does it largely cover for where the commodities are right now or it covers 50%, whatever? Is there some thoughts that you can share, you know, what is the offset that we've already managed through the price hikes taken?
Thank you for the question, Gunjan. The price hike that we've taken is close to 2%. It varies by different models, but approximately say 2% of the sale price. Commodity and the labor cost and the fuel cost increase is far higher than that. It's in high single digits, and it's changing day by day. The price hike as of now does not cover fully the BoM cost increase. Having said that, the other mitigating factors that, as Vivek talked about, is BoM cost reduction through our value engineering, concept saving kind of programs. Some of the offsets that we are also getting through reduction in discretionary spend and volume leverage.
There are offsets through other things, but, all of these put together in the short term will still have a margin impact, which will be transitory, as Vivek mentioned. It will not fully offset the total commodity impact.
Just so, you know, maybe I am clear, what you mentioned is high single digit increase. That you mean is high single digit increase as a percentage of ASP or as a percentage of revenue? That's the way I should look at that number, right? 2% again, maybe, you know, I.
Great. Great point. Two percent was on the revenue, on the sale price, but high single-digit was on the BoM cost.
Okay, got it. That's clear. The second question, I am just going back to the introductory points that you made on capacity ramp-up. Could you just refresh us where we are on EV capacity, e-scooter capacity right now? Where do we plan to take it through the course of the year? Also on the ICE scooters, that is the Xoom and the Destini portfolios, because I think that is something that you all also spoke about in last quarter that we are facing capacity bottleneck. Some refresh on the numbers will help on both e-scooters and ICE scooters.
Sure. Starting with ICE scooters, we increased our Destini capacity by 50% already. We are in process of doubling our Xoom capacity, so significant on both of them, as you can see. On EV, we are close to completing expansion, which will effectively get us 50% more capacity than the last quarter. Within a month, we'll be at a 50% more capacity than last quarter. Additional few quarters down the road, we are in process of further doubling capacity.
We have a 60,000 odd scooter volume run rate right now. Is it fair to say you're sort of working through a number which is closer to?
You know, if you're saying doubling, this could be closer to 100,000. Is that what we're seeing visibility in the business?
That's our ambition.
Okay. Got it. Last question maybe, you know, Harsh, for you. Now you're three months into the firm, right? I mean, any thoughts that you would, you know, sort of like to talk about how you are looking at recalibrating strategies, areas that you're prioritizing, doubling down on areas where you think, you know, could be, you know, where we are doing fine and, you know, can be kept aside for a bit. Some thoughts three months into the system, any recalibration to the strategy, anything that you'd want to talk about?
Sure. Let me start with one part of your question where I, where I've seen where we are already doing very well, and it's a question of continuing and just doing more of the same, first part of it. Then I'll come to the second part of where else are we going to focus more. We are doing exceedingly well when it comes to entry and commuter motorcycles. In some of those ranges, as you know, we have market share in excess of 90%. Last year, we grew on top of that market share. We are doing exceptionally well when it comes to our entry and commuter motorcycles. We have probably in best in the industry go-to-market in terms of points of sale and also points of service. Wherever you go in the country, we are present.
In fact, in 93% of the talukas in the country, we have our point of sale presence. You, a biker today, a rider can buy our bike and go anywhere and expect service will be available. I think these two, I would say, are a great foundation. Third, we do see brand salience high across various categories, and we do see across value chain, whether suppliers or dealers, I think relationships and trust that I'm sure a lot of the competitors and peers could give an arm and leg for. Those are the things that are actually great and we are going to maintain going forward. Where are we going to put more emphasis and where there is more opportunity?
First, as we talked about in last quarter as well, is have a bigger pie of the scooterization trend that we see, hence all that capacity expansion that we spoke about. We will have even stronger play going forward in scooters. We will also have much, much stronger play and share going forward in our EV. You've seen our continued commitment, whether it was many years back to Ather, to last financial year, to Euler, which also gets into additional categories in EV and continued investment in Vida. EV is a second area of focus. Our third big area of focus for us is other low emission powertrains. We believe India is not just a single low emission powertrain story. There'll be multiple different powertrains will have their role to play.
Where, hence we are also investing, and you should see some launches on that from us on vehicles that will work on higher blends of ethanol. We are also increasing focus going forward on our technology, and that's where I spoke about in my opening remarks on different powertrains, connected vehicles, use of AI in different functions. That's another area where we are increasing emphasis. Lastly, as a relatively late entrant into exports, we started much later than some of our peers. We have a lot of headroom for growth in our global business. Last year, we grew by 41%. Year before that, we grew by 40%. Still, our exports is much smaller than what it could be.
Hence, that will be a continued focus of expanding right market fit products for different geographies in the world and also opening more and more countries in terms of our presence. We are right now present in 52 countries, but we see opportunities in many more. Gunjan-
Got it.
Any other question?
Super useful. Thank you so much and best wishes.
Thank you.
Thank you. Before we take the next question, ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participants in the conference call, we request you to kindly limit your questions to two per participant. If you have a follow-up question, please rejoin the queue again. We will take the next question from the line of Amyn Pirani from JPMorgan. Please go ahead.
Yes. Hi. Thanks for the opportunity. Actually, my first question is, you know, something that, you know, sir, you mentioned towards the end of your comments on the exports. Last 2 years, we've seen a very sharp increase in our exports. Any, you know, color or guidance you can provide as to how should we think about maybe the next 12 months or maybe the next 12 to 24 months in terms of the momentum, and are there any specific markets, you know, where we are seeing any improvements, and how should we think about the development in this segment? Also, are there any near-term risks that we should think about given, you know, whatever is happening in terms of logistics, global shipping lines, so on and so forth?
No, thank you for your question. We have good traction on our products in Latin America. There are more and more countries where we plan to open our presence and strengthen our presence. Latin America, we have presence, and we should see more opportunity there. We are relatively small in Africa, but we are now opening many countries, also planning launches next year in Africa. We are actually the largest two-wheeler brand in Bangladesh. We operate only in about 50% of the market there. We don't operate in 50%, and we are planning to have our launches into that balanced 50% as well this year.
We have reentered after a bit of a hiatus in Sri Lanka last year. We are rapidly gaining share in Sri Lanka. To answer your question, nearby SAARC geographies, Africa, which is a new entry and expansion for us, Latin America is further building on what we are already doing and getting into newer territory. We do hope to continue our momentum of last 2 years in FY 2027 as well. Having said that, the last part of your question about certain some near-term challenges out of the West Asian war. We do see a fuel price hike in Bangladesh, in Sri Lanka. There we do see some impact on demand in the short term.
We do see increase in transportation cost, container costs, all over the world, but that's a matter of then pricing it and passing it on in the end retail price. So far, we and our dealers have been able to do so.
Great. Thanks for the color and, you know, thanks for the comments here. My second question is more on the, you know, the domestic demand and market share. You know, while it is, you know, well appreciated that in every category or most categories you have, you know, managed to gain share last year, because of the, you know, differences in your salience in scooters and EVs, you know, your market share, overall retail market share still has come off a bit, even though that trend was also much better than the last few years. Looking forward in FY 2027, I know it might be a difficult question to answer.
How should we think about your retail overall market share and the salience, and how soon do you think that your salience in scooters and EVs can catch up so that your overall market share, you know, starts to look stable to improving?
I think it's a great question and the way you put it, that while we gain share across categories, because of the business mix of different categories, it appears that arithmetically total retail share has come down. As we continue to outgrow the market in these high growth areas, whether it's EVs or scooters or premium or also in our exports, in each of them, and as that share continues to grow in our business mix, I think it's a matter of time where we expect to see overall reversal and also gaining of total retail market share. I think it's a question of just doing a math of how many quarters of that continued share gain will flip that.
If we were to look at our last 2 quarters of growth on each of these categories, we have outgrown the market significantly on each of these categories, and hence it's a question of just continuing that momentum. EV, for example, 2.5 times the industry. Scooters, 48%. Exports, 41%. Harley-Davidson range, 26%. I mean, it's a question of now just continuing that momentum for a few more quarters and then the math flips.
Sure. We'll look forward to that, sir. Thanks for the opportunity, and I'll come back in the queue.
Thank you. We will take the next question from the line of Kapil Singh from Nomura. Please go ahead.
Good morning, sir. Thanks for the opportunity. I just wanted to understand how you think will be the pacing of growth between the 2 halves of the year, because last year we had a very strong second half and a flattish first half. In the second half of the year, are you expecting growth on this base? Just some color there will be helpful.
You're right. I think we do have a benefit of base effect in the first half. Hence we do expect the first half growth to be stronger. I think the second half will be relatively lower than the first half.
Yeah.
I think there is a base effect definitely that will come into play. Overall, for the full year as a whole, we do continue to see growth momentum that you have seen in our overall revenue growth of FY 2026.
Sir, also had a quick follow-up on the commodity cost. In Q4, how much commodity cost pressure did we face?
Kapil, in Q4, let me just a second. Our commodity cost increase in Q4 was a total of INR 2,000 per unit. In terms of if you really look at our revenue per unit, we also had a corresponding increase of INR 2,000 in the revenue per unit.
Okay. Sir, how much price hike we have taken in April?
About 2%.
About 2% we've taken. That ranges by products. It starts with anything from INR 700-INR 3,500.
Okay. Sir, just one follow-up on the EV demand and the scooter demand. You've been talking about, you know, much higher growth for scooter portfolio. Just from a, you know, consumer trends point of view, if you could share that. Last few years we have been observing that motorcycle growth has been, you know, in somewhere in mid-single digits, and scooters and EVs has been much higher. Is there a shift also happening here between these categories, or it's just that, you know, more consumers are coming in the scooter category? Because, you know, is this a trend that we should expect for next few years? Just trying to understand.
In the near term, that's definitely so. I think the scooterization happened to the industry, and scooters as a share of two-wheeler industry has grown by couple of points every year for last few years. We do expect that to continue in the near term. Hence, you saw so much of focus from us in new launches in scooters and building up of our capacity in scooters that we spoke about.
Sir, just trying to understand if, you know, motorcycle consumers are also in some way straddling towards scooters as more options are coming here? Is that something you're observing or it's just that the scooter consumers are growing much faster?
We are not seeing shift away from motorcycles, if that was your question, because these are two different consumer use cases. Wherever you need longer commute or higher load-bearing capacity, that's where motorcycles come into play. Hence, these are two distinct use cases. With the urbanization that's happening in the country, the use case where scooters are a good fit is where the growth has been higher. It's not that people who have motorcycles are leaving motorcycles and going to scooters.
Okay. Thank you so much.
Thank you. We will take the next question from the line of Raghavan Nandan from Nuvama Wealth Management. Please go ahead.
Thank you, sir, for the opportunity. Congratulations on good set of numbers. Firstly, I wanted to request your thoughts on couple of regulations. One is that, mandatory ABS regulation, and second is, this draft EPR notification which came out recently. Wanted to check what is your thoughts, what is the status currently, and what do you think can be the impact in future?
On ABS, there hasn't been any development over last few months. We'll continue to work with government on ways and means to keep making two-wheelers safer. On specific ABS related regulation draft that had come, there has not been any further development on that as of now. On the EPR draft, Vivek, do you want to give some more details?
EPR at this point in time, as you rightly said, it's still an evolving stage, right? The industry is at this point in time working on in terms of how to really operationalize it, right? And as you know, the pricing is still evolving, so I think it's early days at this point in time for the industry. Yeah, it's difficult for us to really quantify any impact.
Noted. Just a clarification. Would there be any retrospective impact as well of EPR?
This is currently under discussion, I'll say. We are really looking at evaluating all options, right? Once we have clarity, and I think the clarity is at an industry level. Once we have more clarity, we'll be happy to really come back to you.
Thank you, sir. Second question is a housekeeping one. Can you share the export revenue for FY 2026 in value terms and also the current dealer inventory? Within that also, if you can give some light on scooter and EV. Because generally that is where dealers say that if EV scooter inventory was much higher, they could have sold much more.
Yeah. In terms of the dealer inventory, it's around 5 weeks, I'll say. Yeah. As Harsh said, we have actually brought down our dealer inventory during the year, right? It's currently at 5 weeks. In terms of exports revenue, it is
Full year.
Just a minute.
In terms of volume, it was in excess of 4 lakh units.
We can come back. We can come back.
We can come back to you with value. I think Vivek is looking up the number.
Yeah, it's around INR 3,500 crores. In terms of volume, it is 402,000 units.
Thank you, sir. On, within the dealer inventory which you mentioned, how much would it be for, say, EV scooters?
That we can certainly take it offline. Yeah, certainly EV scooters will be on the lower side. As Harsh talked about, we are in the process of building capacity.
Nationally, in single-digit days.
Noted, sir. Thank you. Thank you so much for the details. Very helpful.
Thank you. We will take the next question from the line of Sonal Gupta from HSBC Asset Management India. Please go ahead.
Hi, good morning, and thanks for taking my question. Most of them have been answered. Just on the, I mean, just the data point on spare parts sales, could you give us what is that for this quarter and the year?
Yeah. For the quarter, it's INR 1,650 crores, and for the full year it's around INR 6,200 crores, which is almost a growth of 6% year-on-year.
Okay. Just also in terms of like you've talked about a few things, but in terms of what is the total R&D spend that we had during the year and how do you see that trending going forward?
I think we can certainly share the numbers, but in terms of trending, clearly we are increasing our spending in this space year-on-year, right? We can certainly offline share the details with you both in absolute and as a percentage of revenue, which I know is close to 2.5%, but we can certainly share the details.
Right. Just, sorry, one last question around, I mean, like you mentioned about the expansion on the scooter and the EV capacities. Could you just sort of give us some quantification, right? Currently, like where are you and by when do you see to what numbers, right? EV, I understand you were at about 15,000 a month, which is coming to 30,000. On scooters, if you could just quantify by when do you see where are you currently and when do you see the extended capacity coming in?
No, we did answer that question earlier. I think, as I said, Destini we've increased capacity by 50%. Xoom, we are in process of doubling the capacity, which will also happen this quarter. On EV, as you mentioned, we've gone from 15,000 to 25,000 to further doubling of that capacity before end of this year.
Oh, the EV will see another doubling by end of this year, is what you're saying?
That's right. Yeah.
Sorry, on the scooters also, could you I mean, by when are we expecting this additional capacity coming in?
This quarter.
This quarter itself. Okay. Sure. Thank you so much.
Thank you. We will take the next question from the line of Jay Kale from Elara Capital. Please go ahead.
Thanks for taking my question. My first question was regarding the demand scenario. I understand you mentioned about high single-digit growth for the industry FY 2027. Just wanted to understand, you know, if you see, three months back also, probably we would have expected a similar kind of growth. Post that, we've seen a lot of, you know, macro headwinds in terms of sentiments around expected fuel price increase, prices increasing. Are you not expecting any dampening of that sentiment? What is driving this on-ground strength? If you could help us some texture around rural versus urban, and, you know, your expectations going forward. That is my first question.
No, it's a good question. It's a evolving situation. Volume growth of high single digit was the expectation pre-war. Post-war, even if you see April and first week of May, that kind of momentum has continued. We have not seen any softening of demand yet because, as a industry, the full inflation has not been passed on because of either productivity or volume leverage, just like what we've done. I think, as a industry, hence that impact is not passed on to consumers, there hasn't been any dampening because of that, nor has there been any significant move on fuel price. As a result, we don't see in the near term the demand going down.
This is an evolving situation and, we need to keep monitoring because of this, impact and the uncertainty that it creates.
Understood. Understand.
To your second question on structural drivers of growth, I think the urbanization in increasing penetration of e-commerce, gig economy, and hence, two-wheelers remaining as a primary source of mobility for bulk of the country, I think that structural momentum is still there. Hence, I think the industry's bullishness towards this volume growth.
Understood. Second question is on, you know, historically we've spoken about scooters and premium motorcycles being the key focus areas for us. It's heartening to see, you know, a lot of actions being taken and yielding results on the scooter side, both on ICE and EVs. If you could just talk a little bit about some of your learnings from that category and how one could, you know, use it to further enhance your presence in the premium motorcycles. That's clearly one of the, you know, last areas where, you know, one should, one could expect, you know, incremental market share gains.
I think our learning has been great products and good brand building yields results, and that's what has happened with our Destini and now with Xoom. You know, great products which are differentiated in their category, backed up by campaigns that have created brand salience. Same on Vida, a differentiated product. We are the only one in the country that offers a removable battery so that your range anxiety is addressed. A differentiated product like this. A brand campaign, you've also seen our sponsorship of KKR and the activation around that. When you combine a product and brand building like that, you see a 600 basis point gain, and hence you can rapidly gain share. That's the learning when you get those two. That's the formula that now we are repeating.
You saw that also with our Harley-Davidson. You know, we launched X440, and there was a product placement of that also in movie Yaariyan 2. So much so that customers would come into our showroom and ask for a Yaariyan 2 bike. Hence, our Harley-Davidson range in Premia, although it's a small part of the entire Premia, but that grew 26% year-on-year. The new variant of that, X440T, that we launched last quarter actually gave us a 120% growth year-on-year for the corresponding quarter. Good product backed up by capacity and brand building investment. I think those three things is what hence we are now repeating as we also expand further into Premia.
Okay. Understood. Great. Thanks, all the best for the future.
Thank you. We will take the next question from the line of Arvind Sharma from Citi. Please go ahead.
Good morning, sir. Thank you for taking my question. It's a sizable CapEx that you are planning, INR 1,500 crores. Just to understand, the entire money would be only for FY 2027. Is that the correct understanding?
That is right. That is, yeah.
Okay. Sir, if you could also share the aspiration for PAM revenue, since you're targeting a second global parts center. Roughly, you've got some target in mind that it should be X percentage of vehicle sales. That would be great just to, you know, understand what the target is. If EV volumes grow significantly, given the capacity expansion, could it impact margins, at least for the near term, or, as you said, PLI would more than offset this? These two questions, sir. PAM revenue target and the impact on margins.
Yeah. On the PAM, if you look at our total vehicle park and, considering that park and the km that they run, how many parts you need to keep them running? If you do that calculation, our estimate is that about 50% of that demand is what we are servicing today. For the balance 50%, either there is gray market or other spurious parts that riders, especially those with older bikes, are accessing. That is the kind of headroom available. First, A, the vehicle park itself is growing, and B, how do we also get more share of that unaddressed parts market? Hence, the capacity that we are building for our parts business pretty much doubles our parts handling capacity.
The new center that we are setting up is to get us a double the capacity. That's first part of your question. On the EV PLI will certainly help in the investment phase as we are expanding capacity. Our continued expansion on ICE should hopefully help us mitigate this continued investment as we rapidly grow our EV.
Sure, sir. Thank you. That is all from my side, sir. Thank you so much.
Thank you. We will take the next question from the line of Pramod Amthe from InCred Capital. Please go ahead.
Yeah. Hi, thanks for taking my question. The first question is with regard to Euler Motors. Now you have been investing consistently almost like INR 200 crores quarterly. Wanted to get how much stake you hold now end of the year, and what is the expected investment plan in FY 2027 or next 2, 3 years?
Yeah. Maybe just to first clarify, we are not investing INR 200 crore quarterly. We closed an INR 210 crore investment as a follow-on investment to our earlier investment, but it's not an INR 200 crore quarterly investment.
Got it.
Could you please repeat the second part of the question?
We just invested INR 200 plus crores. That takes our shareholding to close to 37%. Yeah.
What's the business requirement, if you can disclose for next 1 to 2 years?
This should take care. You are right. Pramod, this should take care of their funding requirement for the current fiscal.
Okay, got it. Second question is with regard to the scooter portfolio. Considering the success which you have achieved on the EVs, does it still make sense to balance both ICE and EV portfolio? Or you could have gone overboard on the EV portfolio and keep the legacy out on building capacity on ICE. How are you looking at it?
What we are seeing is both are growing rapidly, and hence there is an opportunity of growth for both, and hence our view is, I think we do need to continue to invest in both and continue, you know, gain share in both.
Okay.
It's a customer choice and different use cases, you know, depending on total cost of ownership, range, and so on and so forth. It's not either/or, it's and for us.
Are you creating flexibility in terms of production capacity, between both of them, or how to look at it?
These are manufactured in the same factory. For example, in our Tirupati factory, both are manufactured there. It's different lines, but in the same factory, so a lot of the infrastructure does get shared.
Okay, sure. If I can ask, Harshvardhan, looking at your 3 months into the tenure, what has positively surprised you in the firm, and what are the challenges you still feel have come through?
I think strength of our value chain, both on the supplier as well as dealerships, I think it's really unmatched across industries, different industries that I came from.
Extremely strong value chain. Especially when industry is transitioning, you know, going from one category to the other, having that strength is very useful because then you can move with that entire value chain with trust. I think that's a very strong, it's I would say more than surprise, something that I wasn't that aware of.
Sure.
In terms of challenge, I would say more of an opportunity that I see in some of these categories where higher growth is and that we spoke of.
Sure. Thanks. All the best.
Thank you.
Thank you. We will take the next question from the line of Sridhar Kalani from Antique Stock Broking Limited. Please go ahead.
Thank you for the opportunity, sir. I just needed few clarification. Firstly, on the gross margin side, in the last quarter, you did mention that 40 to 50 basis impact was expected in Q4. We see a sequential, significant impact of over 100 basis in the gross margin. This is in spite of your earlier, commentary that the INR 2,000 per unit commodity hike was adjusted with a similar price hike. Just wanted to understand if I'm missing something over here because there seems to be a disconnect. In the near term also, you did mention that further commodity impact may be witnessed. If any clarity could also be given over there.
Third, like the INR 2,000 per unit commodity price hike, if you could directionally help us understand how, like, what was this, aluminum, steel or, rubber prices, if anything on, direction basis could be shared, would be really helpful. Thank you.
Thanks, Sridhar. I'll just repeat. During quarter four, the material cost inflation was INR 2,100, and the corresponding revenue increase during the quarter was INR 2,000, right? Clearly you see an impact in gross margin when you compare on a percentage basis of 100 basis points because the margin impact could not be recovered in the last quarter. That's almost contributing to 60% of the drop in gross margin.
If you see, the value is covered.
Yes.
The cost increase is covered by price, but not the % margin that you get on that cost. That's what creates that margin % impact, not the margin value impact.
Yeah, the percentage impact there. Secondly, there is a higher BoM cost from EV business, which also partially impacted our gross margin percentage in the previous quarter. Those are the two reasons why you find 100 basis drop in the gross margin in quarter four.
Sir, from the 2,000, if any directional breakup could be shared, aluminum, steel, rubber, which is the most significant, if anything could be shared?
Yeah, you're right. I think, I can say that yes, we have seen inflation across the commodity basket led by aluminum, steel, rubber prices and plastics have also got impacted because of high crude prices. Overall, there is a marginal increase we've seen previous quarter in the commodity prices. It's basically across.
Okay. Sir, one clarification requested on capacity of EV that you mentioned. 50% will be done by next month increase, next increase will be of the additional, including the additional capacity that we may have?
We said the first one will be in a matter of month, and the second phase will be before end of this financial year.
Okay. All right. Thank you, sir.
That was the last question. Thank you.
Yeah.
Thank you. Thank you all for joining the call.
Thank you everyone for joining the call. In case you do have any follow-up questions, you know how to reach us, and we will get back to you responding to your questions. Thank you. Wish you all a good day.
Yeah. Thank you.
Thank you.
Thank you.
Thank you, members of the management. On behalf of Kotak Mahindra Financial Services Limited, that concludes this conference. Thank you all for joining with us today. You may now disconnect your lines. Thank you.