Hero MotoCorp Q1 Preview: Steep volume decline to dent revenue and profitability

Hero MotoCorp shares have risen over 20 percent in the last three months.

New Delhi-headquartered Hero MotoCorp Limited is set to release its earnings report for the first fiscal quarter of FY26 on August 6. Analysts expect a drop in revenue as domestic sales remain subdued. Margins are also expected to slip during the quarter.

According to a Moneycontrol poll of eight brokerage firms, the two-wheeler major is expected to record a 3.7 percent year-on-year decline in revenue, reaching Rs 9,759 crore. Net profit is also projected to witness a downtick of 6.1 to Rs 1,054 crore from Rs 1,123 crore in the same quarter of the previous fiscal year.

Earnings estimates from analysts polled by Moneycontrol are in a narrow range, indicating that any positive or negative surprises could trigger a sharp reaction in the stock price.

What factors will affect Hero MotoCorp's earnings?

Domestic volumes dip: Hero MotoCorp is expected to witness an 11 percent drop in volumes in the first quarter. The two-wheeler major sold 13.67 lakh units, sharply lower from 15.35 vehicles sold in the same quarter of the previous fiscal.

Margins under pressure: EBITDA margin is expected to come in at 13.9 percent, down 50 basis points year-on-year, largely due to negative operating leverage (production halt in April) being partly offset by richer product mix and cost control efforts. "EBITDA margin will decline on the back of higher raw material," HDFC Securities said in a preview note.

Operational Hurdles: The company encountered production challenges in April, which disrupted output and affected dispatches. Additionally, demand in the 110 cc motorcycle segment — a key volume driver — remained tepid. This double whammy of supply constraints and muted retail interest dragged down overall performance for the quarter.

What to look out for in the quarterly show?

Investors will look for guidance on FY26 two-wheeler volume growth across sub-segments. Commentary on replacement demand and the divergence between urban and rural demand trends will also be closely tracked. Updates on EV orderbook and ramp-up plans will be of interest, experts say. Additionally, the market will watch for details on upcoming model launches, orderbook and sales performance of high-end (HD) models.

Shares of the company were trading at Rs 4,469, higher by 3.65 percent from the last close on the NSE. Hero MotoCorp shares have risen over 20 percent in the last three months.

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