FY26 closes record-strong (rev ₹46,830cr +15%, EBITDA 14.7%).

Looking at the next 5-10 years prospect of premiumisation, Hero still has close to 80% market share in entry-level motorcycles with strong customer base who will upgrade. Xtreme 125 has been a success but more of catching up with competition. How do you plan to capitalize on your strong base and gain market share in the 125cc segment over the next 5 to 10 years?

We've had very strong gains in 125cc this year, gaining close to 250 basis points in market share on a full year basis, with Xtreme 125R selling close to 300,000 units and the overall Xtreme portfolio touching close to 0.5 million units. The recent launch of Xtreme 250R has met with amazing response, and we're confident this brand will become much stronger and a power brand in itself. We have exciting product launches planned in 125cc which will make us even stronger and we are confident we'll gain share and move towards leadership.

Are you suggesting that we'll be looking at more product launches in 125 category in near future?

Yes, as per market need. We have an exciting product lineup that's planned for the future.

On the comment about mid- to high-single digit growth in the industry - I want to clarify that's volume growth for the industry. And as a follow-up, what is Hero's expectation for FY '26 in terms of volume?

Overall, this year, we expect the industry to grow in the region of around 6% to 7%, pretty much the same as last year. We have a lot of tailwinds - good monsoon prediction, good marriage season, income tax relief, government spending and lower inflation. We are very confident of our performance with launches that happened in Q4 yet to fully manifest in volumes, and we are very confident that we'll outpace the industry growth and gain share.

On channel inventory - you mentioned scheduled maintenance at key plants in April caused retail growth to exceed wholesale growth. Where are we in terms of channel inventory in number of weeks now?

After this, we were sufficiently covered. Our channel inventory currently stands at around 4 to 5 weeks, but inventory is always forward looking. As we get up with the festive season, we will be able to step it up in accordance with what we expect, but we are sufficiently covered in terms of inventory currently at 4 to 5 weeks.

Should we understand 4 to 5 weeks or maybe 4 weeks is the normalized level going forward? And on launches in Q4, any initial sense on response to Destini 125 or the premium motorcycle and what numbers you are expecting to ramp up over the next few months?

If you look at performance last month in terms of VAHAN registrations, we had crossed 5 lakhs. A channel inventory of anywhere between four to six weeks is the normal level we want to operate in. We've launched products in Q4 with amazing response - our scooter market share inched up by almost 140 basis points basis the new launches. The order pipeline - booking pipeline is extremely strong and as we move into Q1 and towards festive, we will see this taking full shape.

On EV losses - 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 we should be thinking about at the current stage?

Our priority is very clearly to grow volumes, scale up the business and grow market share. What will make this business profitable is scale-up, BOM cost reduction through localization and PLI benefit realization. At a 25,000, 30,000 levels of volume per month, we hope this will break even, which in our view is couple of years away.

On guidance of outperforming the industry - we had the same optimism last year, claimed best launch pipeline, but industry retail grew 8% and we grew retails by 1%. What gives you confidence this year with slightly lower industry growth and not-as-actionable launch pipeline as last year? And what would be linkages on margin aspirations?

The confidence comes from the delivery in Q4 - in the entry category, we gained 600 basis points in market share, and over the year we recovered on 125cc strongly gaining 250 basis points. The new scooters launched have met with amazing response leading to market share increase in the later part of Q4 and retail growth. We have 1 lakh customers reporting into our workshops every day giving us excellent opportunity for upgrades and own-based marketing - these fundamental strengths will help us outpace industry growth.

When you talk about market share, are you talking about Y-o-Y market share trends or sequential market share trends? Because looking at VAHAN, Y-o-Y market share has declined since January to April. Is this sequential gains?

Referring to sequential, Pramod, but also I think, May, it's translating into Y-o-Y as well.

On non-vehicle revenue for the quarter - even adjusting for spares, our ASP is looking much higher on a sequential basis. Are there any other larger amount of non-vehicle revenue or other stuff which has boosted the revenues for this quarter?

There is a revenue per unit growth of almost 4% year-on-year, largely driven by two-wheelers and parts business. Specific to your question on quarter-on-quarter, ASP increased by Rs. 2,236 - largely two-wheelers contributing two-third of it and the balance coming from spare part business. This is largely the mix effect.

On the production issue - somewhat uncharacteristic for Hero. Could you give some more color into that? Was it some supplier-related issues which led to the disruption with three plants down?

Last month, we had a planned production halt at four of our factories in Dharuhera, Neemrana, Gurgaon and Haridwar. The primary driver was to realign the supply lines, but also we had scheduled maintenance and made some infrastructure investments and upgrades. This did go on to impact some of our dispatches in April, but we are at full strength in May and there was no real retail impact.

On the financing side - we're getting mixed responses, two-wheeler financing is becoming tighter. Given the entry-level portfolio, are we seeing any of that? And what is the export outlook for FY '26?

Our retail finance penetration for Q4 was in the region of 59%. For the full year, it was at 63%, but this is seasonality that comes into retail finance in Q4. We were same at the same level last year, so at penetration level, we haven't seen an impact. The nature of products has changed because of stress some financiers have seen, but with easing of interest rates, we expect low EMIs to become a larger part of the overall basket.

Can you let me know, what is the spares revenue for the quarter?

It's Rs. 1,553 crores, which has grown by 11% year-on-year.

Spares has been growing quite well for the last few years. Could you share some insights here? What is driving this growth ahead of volume growth?

Parts business growth is something we look back with pride over the years. There has been a lot of fundamental work - scaling up the networks so we are much more deeply penetrated today, especially in the aftermarket. We've expanded our portfolio when it comes to accessories and added new product lines like tyres and batteries, all adding up to consistent performance.

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. And I think, other products, we are in the process of filing the application.

On the ASP increase quarter-on-quarter, is there an element of OBD price hike captured there? Can you quantify that?

OBD price increase is almost 2% which is the case in the industry. The Q4 numbers have very little of it because this was phased out over the months and model on model. So very little impact in the Q4 ASP increase.

So large part of ASP is essentially mix - is it within the models that what we are selling is probably higher variants or higher price points? Because there's been quite a step-up in ASPs over the last couple of quarters.

Compared to last year, our ASPs have grown by 4%. Large part is coming from mix improvement within the segments and a part from price - two-third from mix and one-third from pricing. OBD-II price increase is effective April so you will see the impact of that in quarter 1.

On the difference between subs and associate profitability which is quite decent this quarter, roughly Rs. 80 crores or so. Can you share some color - has been in losses for last couple of quarters. Is there a one-off here or any turnaround?

The number has always been a lower number. This time, we had a onetime gain of CCPS conversion to equity in case of April. And that has translated into a onetime gain of Rs. 170 crores. So that's the one which has really inflated the profitability in our consolidated results for the quarter and for the full year.

On margin improvement journey in coming 2 to 3 years - do you see any risk due to rising EV and export mix?

I don't see a risk. This is a very conscious investment the company has decided to make in the next couple of years, near to middle term. What is important is to scale up the business fast, grow it profitably. We will continue to grow our business and reinvest in EV. Therefore, our margins will continue to be in the range of 14% to 16%.

Outlook for urban and rural separately for this fiscal?

Better monsoon prediction, good marriage season, increased government spending in rural areas, lower inflation - all that we expect will work in favor of rural. Our rural contribution is in the high 50s. We expect that to be as strong, in fact expect good rural growth coming this year overall. We are very confident since we have a product line-up that's strong in some of our base categories.

On 100cc motorcycles - industry volume and Hero volume have seen some decline in last 2 quarters. How do you see volume expectations for this segment going forward? What are the drivers?

For the last few years there was stress at the bottom of the pyramid which is why this segment had probably seen a little more stress. In Q4 we saw an impact across categories not only in these. We are a very dominant player in this category - in 100cc we operate with almost a 90% market share with 600 basis points YoY increase in entry market share. With rural coming back stronger this year, this segment will do well led by us.

On new products on the EV side, like Vida Z - when can we expect these products? Any other launches you want to highlight for FY '26?

Our existing product has been received very well and volumes are anywhere going from 7,000 to 8,000 on a monthly basis. Very shortly, we are launching an upgrade which will be far better in terms of value proposition to the customer. It will come with a launch in July addressing basic customer requirements across the segment.

How do you see the collaborations, synergies playing out with your partners - Ather, Zero Motorcycles or Euler? How can it benefit the company over the near term, medium term?

On Ather, it's a long-term investment we've made and we continue to stay invested. Euler is just a start of the relationship - it's a very exciting category and business with experienced team mixing young professionals and industry experience, with a very differentiated product to offer in the marketplace. We have synergy with Ather on charging infrastructure and on Zero front it's the technology at higher voltage which we are absorbing.

On HF Deluxe - if we see FY '19 volumes versus FY '25, HF Deluxe has seen a major drop while Splendor has been flattish or grown. What is it that the HF Deluxe demand has been so impacted? Are customers moving to Splendor?

From FY '19 to FY '25 there was huge disruption - COVID impacted disposable incomes and BS-VI transition increased bike prices substantially. Customers at the bottom of pyramid came under affordability stress. Used two-wheelers rose to close to 1.5:1 of new sales post COVID. We invested aggressively in augmenting value proposition, and we saw replacement demand coming back significantly from almost 6% to 11% in Q4 sequentially - we are confident customers who dropped out will come back.

The replacement number which you quoted of 11% - is it of the total volumes? And with FY 2018-19 base being so high, do we expect this to go up? To what levels does the replacement demand peak normally?

Yes, total volumes. We've seen replacement demand to be in the vicinity of around 18% to 20% generally. We expect that it will gradually bounce back to that level. And of course, it will also depend in terms of the innovation that people are able to bring about, overall across the industry.

Are we seeing some kind of customer moving from the HF Deluxe to a scooter segment? Some kind of data which we work on - do we see that shift towards scooters there?

The category drivers for both of these segments are very different. So I mean scooters are largely into a different space altogether. This is - I mean the average running is much higher, so I would not want to draw that conclusion.