Hero MotoCorp profit rises 40.85%, but costs pressure operating margin
Other income contributed 26.21% of pre-tax profit, while operating margin was broadly flat sequentially after a 1.92-point year-on-year decline.
Filed 28 Oct 2026, 21:08 IST · after market close · Hero MotoCorp Ltd (HEROMOTOCO)
Key takeaways
- Consolidated net profit rose 40.85% year on year, helped by a 4.45-percentage-point fall in the tax rate and other income equal to 26.21% of pre-tax profit.
- Revenue grew 22.52% year on year, but expenses grew 25.30%, narrowing operating margin by 1.92 percentage points to 13.34%.
- Operating margin recovered 0.04 percentage points sequentially, while management said it plans to expand capacity to 9.2 million units by March 2027.
Price around the results
Profit growth relied partly on non-operating income
Hero MotoCorp’s consolidated net profit increased 40.85% year on year, faster than the 32.90% rise in pre-tax profit. Other income accounted for 26.21% of pre-tax profit, while the tax rate fell 4.45 percentage points, so reported profit growth was stronger than operating-profit growth. Sequentially, net profit rose 31.22% as revenue increased 14.05% and other income grew 48.82%.
Cost growth outpaced sales over the year
Year-on-year revenue growth of 22.52% lagged expense growth of 25.30%, reducing operating margin by 1.92 percentage points to 13.34%. Interest expense also rose 18.08%, although it remained a smaller factor than the operating cost increase. Quarter on quarter, revenue and expenses grew at almost the same pace, leaving operating margin up 0.04 percentage points.
Margin remains above the reported sector median
Hero MotoCorp’s 13.34% operating margin was 0.60 percentage points above the 12.74% median for the 83 Consumer Discretionary peers that had reported the quarter. The margin has not regained the 15.26% recorded in Q2FY26, but it was broadly stable after falling to 13.30% in Q1FY27. The latest sequential improvement is therefore modest rather than a reversal of the longer year-on-year decline.
Management points to capacity and non-product revenue
Management said FY27 capital-expenditure guidance was reaffirmed and that the company plans to expand capacity to 9.2 million units by March 2027. It also said 150 Premia stores were operating, 16 more than in the previous quarter, and that it is scaling connectivity, charging, subscriptions, and VIDA parts, accessories and merchandise as non-product revenue streams. Management said global-business dispatches were affected by operational issues, while H1 FY27 global volumes increased 8% and the business was preparing for faster growth in Q3.
Market response is still pending after the late filing
The consolidated results were filed after market close, so there was no market reaction yet. After its previous eight results, the stock rose seven times and fell once, with a median absolute move of 1.19%, providing the relevant historical context for the eventual response.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹14,971 cr | ₹13,126 cr | +14.05% | +22.52% |
| Other income | ₹619 cr | ₹416 cr | +48.82% | +334.73% |
| Expenses | ₹12,974 cr | ₹11,380 cr | +14.00% | +25.30% |
| Operating profit | ₹1,997 cr | ₹1,746 cr | +14.37% | +7.13% |
| Operating margin (%) | 13.34% | 13.30% | — | — |
| Interest | ₹23 cr | ₹21 cr | +6.17% | +18.08% |
| Depreciation | ₹232 cr | ₹220 cr | +5.43% | +10.22% |
| Profit before tax | ₹2,361 cr | ₹1,921 cr | +22.94% | +32.90% |
| Tax | ₹501 cr | ₹503 cr | -0.39% | +9.86% |
| Net profit | ₹1,861 cr | ₹1,418 cr | +31.22% | +40.85% |
| EPS (₹) | ₹92.99 | ₹70.59 | +31.73% | +42.16% |
Operating margin of 13.34% compares with a Consumer Discretionary sector median of 12.74% across 83 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Global-business volumes increased 8% in H1 FY27.
Guidance & outlook
- The company reaffirmed its FY27 capex guidance.
- The company plans to expand capacity to 9.2 million units by March 2027.
Planned next quarter
- The global business is preparing to accelerate growth in Q3.
Expansion
- The company opened 150 Premia stores, up 16 quarter on quarter.
New initiatives
- The company is scaling non-product revenue through connectivity, charging, subscriptions and VIDA parts, accessories and merchandise.
- The company launched the premium-performance Xclusive Parts range.
Problems & risks
- Global-business Q2 dispatches were impacted by operational headwinds.
What to watch
- Whether operating margin holds above 13.34% after its 1.92-percentage-point year-on-year decline.
- Whether other income remains below 26.21% of pre-tax profit as reported profit quality is assessed.
- Progress against management’s stated plan to expand capacity to 9.2 million units by March 2027.