Hero Motors Q1 FY27 Results (NSE: HEROMOTORS)
Signal: Margin expansion
The read
The quarter marks a clear standalone operating inflection: standalone EBITDA margin expanded 508bps YoY to 16.32%, but the consolidated margin rose only 178bps to 12.30% because Alloy and Metallics remained loss-making at -₹255.13 lakh and unallocable costs were -₹419.47 lakh; the trajectory depends on converting group-level growth into subsidiary profit.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | 31,932.31 lakh | +24.9% | -1.0% |
| EBIT | 2,675.76 lakh | +67.2% | |
| Net profit | 957.1 lakh | +146.9% | |
| EPS | ₹0.27 | +107.7% | |
| EBIT margin | 12.30% |
P&L walk
Consolidated revenue increased to ₹31,932.31 lakh, +24.9% YoY, and EBITDA rose 45.9% to ₹3,926.72 lakh as employee costs and depreciation grew slower than revenue; however, Alloy and Metallics remained loss-making at -₹255.13 lakh and unallocable costs swung to -₹419.47 lakh, limiting PAT to ₹957.10 lakh.
Segments
Powertrain Solutions drove the group with revenue of ₹17,053.13 lakh, +25.8% YoY, and segment result of ₹3,350.36 lakh, +85.0%; Alloy and Metallics grew revenue 29.7% but remained loss-making at -₹255.13 lakh, while unallocable costs swung from income of ₹155.49 lakh to expense of ₹419.47 lakh.
Key positives
- Consolidated revenue reached ₹31,932.31 lakh, +24.9% YoY, with Powertrain Solutions revenue up 25.8% to ₹17,053.13 lakh.
- EBITDA grew 45.9% to ₹3,926.72 lakh versus revenue growth of 24.9%, a +21.0pp growth gap; employee costs grew 9.9% and depreciation 14.7%, both below revenue growth, while EBITDA margin expanded 178bps to 12.30%.
- Powertrain Solutions segment result rose 85.0% YoY to ₹3,350.36 lakh, providing the main consolidated earnings engine.
- Standalone EBITDA margin expanded 508bps YoY to 16.32%, and standalone PAT increased 168.8% to ₹2,340.48 lakh.
Key concerns
- Alloy and Metallics remained loss-making at -₹255.13 lakh despite revenue growth of 29.7% to ₹16,590.73 lakh, limiting conversion of group revenue growth into consolidated profit.
- Unallocable income/(expenses) swung from income of ₹155.49 lakh in the year-ago quarter to expense of ₹419.47 lakh, a ₹574.96 lakh adverse movement.
- Consolidated PAT of ₹957.10 lakh was substantially below standalone PAT of ₹2,340.48 lakh, showing that subsidiary and group-level losses materially dilute parent-company earnings.
- The proposed acquisition would increase ownership of loss-making Hewland Engineering from 51% to 90%; Hewland reported FY26 turnover of ₹134.92 crore and PAT of (₹3.74 crore), with consideration of approximately £0.60 million.
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