Hero MotoCorp Q3FY25 Preview: Muted Growth Amid Weak Domestic Demand

Highlights

• Revenue expected to rise 3.8% YoY to ₹10,099 crore
• Net profit projected to grow 4% YoY to ₹1,114 crore
• EBITDA margins likely to contract due to higher discounts and rising EV sales
• Subdued domestic demand and weak motorcycle sales to weigh on earnings
• Exports up 15% YoY, providing partial relief
• Stock down 12% in three months; closed at ₹4,237 on NSE (-1.2%)

Hero MotoCorp Q3FY25 Earnings Preview

Hero MotoCorp, India’s leading two-wheeler manufacturer, is set to announce its Q3FY25 earnings on February 6. Analysts expect muted growth in revenue and profit, as weak motorcycle sales and sluggish domestic demand continue to challenge the company.

Margins are likely to remain under pressure due to aggressive discounting, a higher share of low-margin exports, and increased electric vehicle (EV) sales.

Expected Financial Performance

Metric	Q3FY25 Estimate	YoY Change
Revenue	₹10,099 crore	+3.8%
Net Profit	₹1,114 crore	+4.0%
Total Sales	14,63,802 units	+0.3%

Source: Analysts’ Estimates

Factors Impacting Earnings

1. Weak Domestic Demand & Sluggish Motorcycle Sales

• Rural demand remains fragile despite some improvement post-Diwali.
• Subdued consumer sentiment and discount-driven sales have limited revenue growth.
• Blended realizations expected to decline 0.5% QoQ due to an unfavorable product mix.

2. Margin Pressure Due to Rising Discounts & EV Sales

• Higher discounts and promotional offers weighed on profitability.
• Increased EV penetration led to lower overall margins.
• Festive season discounts and higher low-margin export sales added to the pressure.

3. Export Growth Offers Some Relief

• Exports surged 15% YoY, offsetting some of the domestic weakness.
• Higher spare parts sales provided additional support to revenue.

Focus Areas in Q3FY25 Earnings

1. Domestic Demand Outlook – Can rural demand sustain recovery post-festive season?
2. Export Growth Trajectory – Will strong export momentum continue?
3. Upcoming Product Launches – What is the timeline for new models?
4. Impact of EV Sales – How is rising EV contribution affecting profitability?

Stock Performance & Market Sentiment

• Hero MotoCorp shares closed at ₹4,237 on NSE, down 1.2% on February 5.
• The stock has declined 12% over the last three months, reflecting market concerns over weak demand.
• Any earnings surprise—positive or negative—could trigger sharp stock movements.

Hero MotoCorp’s Q3FY25 earnings are expected to show only marginal growth, with profitability under pressure due to weak domestic sales, rising EV penetration, and aggressive discounting.

While export growth and spare parts sales provide some cushion, the company’s domestic demand outlook and upcoming product launches will be key to its performance in the coming quarters.