Hero MotoCorp's Q1 margin slips as costs outpace revenue growth
Revenue rose 34.94% year on year, but lower other income and a higher tax rate pulled consolidated net profit down 16.87%.
Filed 06 Aug 2026, 23:12 IST · after market close · Hero MotoCorp Ltd (HEROMOTOCO)
Key takeaways
- Hero MotoCorp's consolidated operating margin fell 1.22 percentage points year on year as expenses grew 36.87%, ahead of revenue growth of 34.94%.
- Consolidated net profit declined 16.87% year on year as other income fell 55.73% and the tax rate rose 6.41 percentage points.
- Operating margin at 13.30% was 0.49 percentage points above the 12.81% median for 107 Consumer Discretionary peers that had reported.
Price around the results
Revenue growth did not translate into operating leverage
Hero MotoCorp's consolidated revenue rose 34.94% year on year, but expenses grew faster at 36.87%, limiting operating-profit growth to 23.58%. Sequentially, revenue increased only 1.14% while expenses rose 2.93%, narrowing operating margin by 1.51 percentage points to 13.30%. The margin was still 0.49 percentage points above the 12.81% median of 107 Consumer Discretionary peers that had reported.
Lower other income and tax weighed on reported profit
Other income fell 55.73% year on year and contributed 21.65% of consolidated pre-tax profit, making the reported profit comparison less representative of operating performance. The tax rate rose to 26.18%, up 6.41 percentage points year on year and 6.26 percentage points sequentially. As a result, pre-tax profit fell 9.66% and net profit fell 16.87% year on year despite higher operating profit.
Margin remains below the FY26 peak
Operating margin reached 15.26% in Q2FY26 before easing to 14.79% in Q3FY26 and 14.81% in Q4FY26; the Q1FY27 margin of 13.30% is therefore below the recent quarterly range. Sequential profit was also pressured by a 14.37% increase in interest expense and a higher tax rate, even as pre-tax profit rose 4.36% because of the increase in other income.
Results were filed after market close
The consolidated results were filed after market close, so there is no reported market reaction yet. After the last eight results, the stock rose six times and fell twice, with a median absolute move of 1.19%, providing the relevant historical response range rather than a reaction to this quarter.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹13,126 cr | ₹12,978 cr | +1.14% | +34.94% |
| Other income | ₹416 cr | ₹158 cr | +163.58% | -55.73% |
| Expenses | ₹11,380 cr | ₹11,056 cr | +2.93% | +36.87% |
| Operating profit | ₹1,746 cr | ₹1,922 cr | -9.15% | +23.58% |
| Operating margin (%) | 13.30% | 14.81% | — | — |
| Interest | ₹21 cr | ₹19 cr | +14.37% | +3.63% |
| Depreciation | ₹220 cr | ₹221 cr | -0.30% | +6.92% |
| Profit before tax | ₹1,921 cr | ₹1,841 cr | +4.36% | -9.66% |
| Tax | ₹503 cr | ₹367 cr | +37.15% | +19.61% |
| Net profit | ₹1,418 cr | ₹1,474 cr | -3.80% | -16.87% |
| EPS (₹) | ₹70.59 | ₹72.98 | -3.27% | -17.21% |
Operating margin of 13.30% compares with a Consumer Discretionary sector median of 12.81% across 107 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +3.14% | +3.41% |
Volume on the results session was 5.29× its 20-day average.
What to watch
- Whether consolidated operating margin recovers from 13.30% after the 1.51-percentage-point sequential decline.
- Whether expenses continue to grow faster than revenue after the 2.93% versus 1.14% sequential gap.
- Whether other income remains near its 21.65% share of consolidated pre-tax profit and the tax rate stays above 26.18%.