Hero MotoCorp - Challenges Galore: HDFC Securities

HDFC Securities Institutional Equities

Our exhaustive channel checks across six of Hero MotoCorp Ltd.’s key states indicate that the 125cc segment is slowly emerging as a customer favourite, and as a result, contribution of 100cc has declined to 51% of motorcycles in FY23, from 58% in FY19.

This shift in mix doesn’t bode well for Hero MotoCorp, given:

1. 100cc has always been its forte and contributes to 78% of its volumes

2. Hero MotoCorp has lost significant market share in 125cc segment to 21%, from 55% in FY19.

This shift in mix has also led to the company losing 510bps share in motorcycles since FY20 to 46.9%. Further, Honda Motorcycle and Scooter India’s entry in the 100cc segment with a well-established brand at a competitive price point undermarks its seriousness to gain a share in this segment, and may pose a serious threat to Hero MotoCorp.

While Hero MotoCorp has a healthy launch pipeline largely focused on the 125cc and above segments, we do not expect it to recover meaningful share, given its multiple failed attempts in the past.

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