Hero MotoCorp FY26 Annual Earnings Summary

Industry-wide rare earth metal shortage could impact EV and ICE component availability; management covered for Q2 but working on alternatives.

Rising prices of aluminium, steel, rubber, and plastics due to West Asia tensions are increasing input costs, with only ~2% price hikes taken so far.

Draft notification mandating ABS for all two-wheelers from June 2026 could increase costs significantly; industry seeking timeline extension.

Entry-level motorcycle segment remains under stress due to affordability and aspiration challenges, though market share gains continue.

Hero FinCorp's performance impacted by high credit cost and NPAs, though management expects improvement with falling interest rates.

Aluminium prices have risen and may cause 1-2% commodity inflation in Q3, though steel prices have softened.

The draft notification for mandatory ABS could increase costs; management is in talks with the government but no final timeline.

Rising aluminium and precious metal prices, along with forex impact, added 40-50 bps cost pressure in Q3 and continue in Q4.

Analyst raised concern that price increases to offset commodity costs could dampen demand, especially after GST-led price cuts.

Extreme 125R and export models face supply bottlenecks due to rapid growth; management acknowledged capacity augmentation is underway.

EV investment of ₹208 crore in Q3, though reduced from ₹255 crore QoQ, remains a drag on overall margins.

Management acknowledged a transitory impact on margins in the short term, as commodity cost increases outpace price hikes and cost savings.