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

Could you share your thoughts on motorcycle industry volume outlook that you expect and for yourself also for FY '27? And which will be the key models driving that growth?

As Vivek mentioned, industry expects high single-digit volume growth in FY '27. 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 points more than motorcycles. So high single digit with a little less motorcycle, more in scooters. And 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.

On margins, could you talk about the price hikes taken so far since the beginning of this year? Is it fair that all the price hikes taken largely cover for where the commodities are right now or it covers 50%? What is the offset that we've already managed through the price hikes taken?

The price hike that we've taken is close to 2% - varies by different model, 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. So the price hike as of now does not cover fully the BOM cost increase. The other mitigating factors as Vivek talked about is BOM cost reduction through value engineering concept saving programs, reduction in discretionary spend and volume leverage. So 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. So it will not fully offset the total commodity impact.

Just to be 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? 2% against maybe...

Great point. So 2% was on the revenue, on the sale price, but high single digit was on the BOM cost.

Going back to the introductory points 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 and also on the ICE scooters that is the Xoom and Destini portfolio? Last quarter you all spoke about facing capacity bottlenecks. Some refresh on the numbers will help on both e-scooters and ICE scooters?

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. And on EV we are close to completing an expansion, which will effectively get us 50% more capacity than the last quarter. So within a month we'll be at a 50% more capacity than last quarter. And then additional few quarters down the road we are in process of further doubling capacity.

Now you're 3 months into the firm. Any thoughts that you would 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 could be - where we are doing fine and can be kept aside for a bit? Some thoughts 3 months into the system, any recalibration to the strategy, anything that you'd want to talk about?

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%. We have probably best in the industry go-to-market in terms of points of sale and also points of service. We have point-of-sale presence in 93% of talukas. Third, we do see brand salience high across various categories and very strong relationships across value chain. Now where we are putting more emphasis: First, scooterization trend - bigger pie of scooters with capacity expansion. Second, stronger play in EV (Ather investment many years ago, Euler investment last year, continued investment in VIDA). Third big area is other low-emission powertrains - higher blends of ethanol. We are increasing focus on technology, powertrains, connected vehicles, use of AI. Lastly, global business - we have a lot of headroom for growth in exports. Last year we grew by 41%; year before that 40%. We are present in 52 countries but see opportunities in many more.

Last 2 years, we've seen a very sharp increase in our exports. Any color or guidance on the next 12 months or 12 to 24 months in terms of the momentum? Are there any specific markets where we are seeing improvements? Any near-term risks given whatever is happening in terms of logistics, global shipping lines?

We have good traction on our products in Latin America. There are more and more countries where we plan to open our presence. So Latin America we have good presence and should see more opportunity there. We are relatively small in Africa but we are now opening many countries and also planning launches next year in Africa. We are actually the largest 2-wheeler brand in Bangladesh but we operate only in about 50% of the market there, and we are planning to have our launches into that balance 50% as well this year. We have re-entered after a bit of a hiatus in Sri Lanka last year and we are rapidly gaining share in Sri Lanka. So nearby SAARC geographies, Africa which is a new entry and expansion for us, and Latin America - further building on what we are already doing. We do hope to continue our momentum of last 2 years in FY '27 as well. On near-term challenges out of the West Asian war - we do see fuel price hike in Bangladesh, in Sri Lanka, 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 pricing it and passing it on in the end retail price. So far we and our dealers have been able to do so.

On domestic demand and market share - because of the differences in your salience in scooters and EVs, your market share - overall retail market share still has come off a bit. How should we think about your retail overall market share and the salience in FY '27? How soon do you think your salience in scooters and EVs can catch up so that your overall market share starts to look stable to improving?

While we gained share across categories, because of the business mix of different categories, arithmetically total retail share has come down. But as we continue to outgrow the market in these high-growth areas - EVs, scooters, premium, exports - and as that share continues to grow in our business mix, it's a matter of time where we expect to see overall reversal and also gaining of total retail market share. 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. EV 2.5x the industry, scooters 48%, exports 41%, Harley-Davidson range 26%. So it's a question of just continuing that momentum for a few more quarters and then the math flips.

How 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. So in the second half of the year, are you expecting growth on this base?

We do have a benefit of base effect in the first half. We do expect the first half growth to be stronger. And the second half will be relatively lower than the first half. So there is a base effect that will come into play. But 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 '26.

In Q4, how much commodity cost pressure did we face?

Our commodity cost increase in Q4 was a total of ₹2,000 per unit. And in terms of revenue per unit, we also had a corresponding increase of ₹2,000 in the revenue per unit.

How much price hike we have taken in April?

About 2% we've taken, and that ranges by products. So it starts with anything from ₹700 to ₹3,500.

On the EV demand and the scooter demand, you've been talking about much higher growth for scooter portfolio. From a consumer trends point of view, last few years motorcycle growth has been 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 more consumers are coming in the scooter category? Is this a trend that we should expect for next few years?

In the near term, that's definitely so. The scooterization has happened to the industry and scooters as a share of 2-wheeler industry has grown by a couple of points every year for last few years. We do expect that to continue in the near term. Hence so much of focus from us in new launches in scooters and building up of our capacity in scooters.

Are motorcycle consumers also in some way straddling towards scooters as more options are coming here? Is that something you're observing?

We are not seeing shift away from motorcycles. These are 2 different consumer use cases. Wherever you need longer commute or higher load-bearing capacity, that's where motorcycles come into play. These are 2 distinct use cases. But with the urbanization that's happening in the country, the use case where scooters are good fit is where the growth has been higher. But it's not that people who have motorcycles are leaving motorcycles and going to scooters.

Can you share the export revenue for FY '26 in value terms and also the current dealer inventory? Within that also some light on scooter and EV?

In terms of the dealer inventory, it's around 5 weeks. As Harsh said, we have actually brought down our dealer inventory during the year. So it's currently at 5 weeks. In terms of exports - in terms of volume, it was in excess of 4 lakh units. Vivek added: it's around ₹3,500 crores. And in terms of volume, it is 4,02,000 units. On dealer inventory for EV scooters - EV scooters will be on the lower side. Harsh added: Nationally, in single-digit days.

Just a data point on spare parts sales, could you give us what is that for this quarter and the year?

For the quarter, it's ₹1,650 crores. And for the full year, it's around ₹6,200 crores, which is almost a growth of 6% year-on-year.

On expansion of the scooter and EV capacities, where are you currently and by when do you see to what numbers? Like so EV, I understand we were at about 15,000 a month, which is coming to 30,000. And on scooters, by when do you see the extended capacity coming in?

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. And on EV, we've gone from 15,000 to 25,000 to further doubling of that capacity before end of this year.

On demand scenario, 3 months back we would have expected similar high single-digit growth. Post that, we've seen macro headwinds in terms of sentiments around expected fuel price increase. Are you not expecting any dampening of that sentiment? What is driving this on-ground strength? Some texture around rural versus urban and your expectations going forward?

It's an evolving situation. Volume growth of high single digit is what 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 an industry, the full inflation has not been passed on because of either productivity or volume leverage. So 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. But this is an evolving situation. On structural drivers - urbanization, increasing penetration of e-commerce, gig economy and hence 2-wheelers remaining as a primary source of mobility for bulk of the country. That structural momentum is still there and hence the industry's bullishness towards this volume growth.

Historically we've spoken about scooters and premium motorcycles being the key focus areas for us. If you could just talk about some of your learnings from the scooter category and how one could use it to further enhance your presence in the premium motorcycles?

Our learning has been great products and good brand building yield results. That's what has happened with our Destini and now with Xoom - 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. So a differentiated product like this and 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. That's the learning when you get those 2 - that's the formula that now we are repeating. You saw that also with our Harley-Davidson. We launched X440 and there was a product placement of that in movie Saiyaara, so much so that customers would come into our showroom and ask for Saiyaara bike. Hence our Harley-Davidson range in premium grew 26% year-on-year. The new variant of that X440 T that we launched last quarter actually gave us 120% growth year-on-year for the corresponding quarter. So good product backed up by capacity and brand building investment - those 3 things is what we are now repeating as we also expand further into premium.

It's a sizable capex that you are planning, ₹1,500 crores. The entire money would be only for FY '27. Is that correct?

That is right.

Could you share the aspiration for PAM revenue since you're targeting a second global parts center? Roughly some target in mind that it should be x percentage of vehicle sales? And if EV volumes grow significantly, given the capacity expansion, could it impact margins at least over the near term? Or as you said, PLI would more than offset this?

On the PAM, if we look at our total vehicle parts and considering the parts and the kilometers that they run, how many parts you need to keep them running - 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. So that is the kind of headroom available. First, the vehicle park itself is growing; and second, 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. On EV - PLI will certainly help in the investment phase as we are expanding capacity. And our continued expansion on ICE should hopefully help us mitigate this continued investment as we rapidly grow our EV.

On Euler, you have been investing consistently almost like ₹200 crores quarterly. How much stake do you hold now end of the year? What is the expected investment plan in FY '27 or next 2, 3 years?

Just to clarify, we are not investing ₹200 crores quarterly. We closed the ₹210 crores investment as a follow-on investment to our earlier investment, but it's not a ₹200 crores quarterly investment. Vivek added: That takes our - so we just invested ₹200-plus crores, and that takes our shareholding to close to 37%.

On 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?

What we are seeing is both are growing rapidly. There is an opportunity of growth for both. Our view is, we do need to continue to invest in both and gain share in both. So it's a customer choice and different use cases, depending on total cost of ownership, range and so on. So 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.

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?

Strength of our value chain, both on the supplier as well as dealerships - it's really unmatched across industries that I came from, extremely strong value chain. Especially when industry is transitioning 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. That's a very strong - more than surprise, something that I wasn't that aware of. 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.

On the gross margin side. In the last quarter, you did mention that 40 to 50 bps impact was expected in Q4. However, we see a sequential significant impact of over 100 bps in the gross margin. This is in spite of your earlier commentary that the ₹2,000 per unit commodity hike was adjusted with a similar price hike. Just wanted to understand if I'm missing something. Could you also directionally help us understand - the ₹2,000 per unit commodity price hike, what was aluminum, steel or rubber prices?

During quarter 4, the material cost inflation was ₹2,100 and the corresponding revenue increase during the quarter was ₹2,000. 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. Harsh added: the value is covered, the cost increase is covered by price, but not the percent margin that you get on that cost. And that's what creates that margin percent impact, not the margin value impact. Vivek further: secondly there is a higher BOM cost from EV business, which also partially impacted our gross margin percentage in the previous quarter. So those are the 2 reasons why you find a 100 bps drop in the gross margin in quarter 4. On commodity breakup - 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. So overall there is a marginal increase we've seen previous quarter in the commodity prices.

One clarification requested on capacity of EV that you mentioned. So 50% will be done by next month increase and then 2x 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.