Hero MotoCorp expects two-wheeler industry to see double-digit growth in FY23

Two-wheeler major to unveil first electric product on July 1

The country’s largest two-wheeler maker Hero MotoCorp said it expects the two-wheeler industry to bounce back in the current fiscal with economic activity picking up and high grain prices augmenting rural incomes.

With macro economic indicators looking positive, the company expects industry to grow in double digits in the current financial year.

“The macro indicators are really looking good, the GST collection we have all seen is all-time high in April, the e-way bills have picked up, I would say all sectors of the economy have opened up,” Hero MotoCorp CFO Niranjan Gupta said in an analyst call.

Grain prices are high, they are augmenting rural income, the monsoon forecast is decent, and so on and so forth, and it is clearly evident also that while COVID may not have gone away, everyone has learned now to get on with their livelihoods and hence the consumer confidence and spending are bouncing back easily and actually solidly, he noted.

“Already, we are seeing signs in April and we have no reason to believe why the two-wheeler industry cannot grow double-digit in FY2023,” Mr. Gupta stated.

Commenting specifically on the growth prospects of the company, he said: “We will have multiple products and variant launches in the fiscal and added with all the actions already taken, we are confident of gaining market share and hence growing ahead of the industry.”

For the 2021-22 fiscal, Hero MotoCorp reported a consolidated profit of ₹2,329 crore, down 21% from ₹2,936 crore in 2020-21. Revenue from operations dropped to ₹29,551 crore from ₹30,959 crore in FY21.

Mr. Gupta said that the entire two-wheeler industry would like to go back to the FY19 peak as soon as possible.

“We got to look at fundamental underlying factors which play to the long-term growth of two-wheeler industry, all those factors are intact and I will repeat those, whether it is under penetration, the need for mobility, whether it is a pent up that has happened in the last 3-4 years, the big pool that is developing, which should actually now propel the replacement demands to be much bigger,” he stated.

Besides, better finance options could also aid in the sales growth going ahead, he added.

“So I think the fundamental growth levers remain intact. How fast it happens, we will have to see,” Mr. Gupta said.

Listing out challenges, he noted: “One of the things that is an area of concern for industries across the board is the cost inflation, which is triggered now by the geopolitical situation as we all know. Of course, this will be a watch out, but we are no stranger to commodity inflation, we have been seeing cycles in the past as well as recently.”

The company would continue to navigate this space through combination of judicious price increases, cost savings and of course broad-based portfolio growth, including premiumisation of certain models, he added.

On the company’s electric product rollout, Mr. Gupta said the two-wheeler major would be unveiling its first model on July 1, 2022.

“We want to ensure that through rigorous testing the product we put in the market is of the right quality and safety parameters as we have always done earlier. For us, customer comes first and business will follow,” he added.