Hero expects Q3-Q4 FY27 double-digit export growth after shocks

Hero expects double-digit export growth in both Q3 and Q4 of FY27 after Q2 disruptions in Colombia and Bangladesh, which each account for close to 25% of its export business. Management said Colombian port and clearance activity had normalized after an earthquake, while recovery in both markets was already visible by the end of Q2.

Why were Hero’s exports disrupted in Q2 FY27?

Hero’s export shipments were disrupted in Q2 FY27 because Colombia and Bangladesh faced challenges in the same quarter, affecting markets that together contribute about half of exports. Management said it could not compensate for the impact through the remaining roughly 50% of its export business because newer overseas markets had not yet reached sufficient scale.

In Colombia, the disruption was related to port operations and market clearances following an earthquake, rather than an availability shortage of shipping containers. Management said these operations had returned to normal by the Q2 FY27 earnings call and therefore expected a quick export recovery to begin in Q3.

Hero did not specify the cause of the Bangladesh disruption in the call. It did say that Hero has a strong market share in both Colombia and Bangladesh, making those countries substantial contributors when conditions are normal but also increasing the shipment effect when both markets face problems during one quarter.

How concentrated is Hero’s export business?

Hero’s export business is concentrated, with Colombia contributing close to 25% and Bangladesh providing a similarly large share, leaving the two markets at about half of overseas shipments combined. Management said the rest of the export portfolio could not offset disruption in those two countries during Q2 FY27.

The Q2 effect was principally on wholesale shipments, while an analyst asked whether underlying retail demand in the affected markets had held up. Management did not provide retail-volume data for Colombia or Bangladesh, but said the recovery seen by the end of Q2 supported its expectation of double-digit export growth in Q3 and Q4.

Hero has already announced expansion into additional countries, but management said these operations are still being scaled through distribution development and broader product portfolios. Until those markets are larger, the recovery profile in FY27 remains closely linked to the normalization of Colombia and Bangladesh.

Which markets is Hero using to diversify exports?

Hero is expanding in Brazil, Mexico and Africa to broaden its export base beyond Colombia and Bangladesh. Management identified Brazil and Mexico as large Latin American two-wheeler markets and said Hero is building a manufacturing facility in Brazil while increasing its presence in Mexico.

Brazil is a priority because Hero has a portfolio of flex-fuel vehicles suited to that market’s requirements, according to management. The call did not disclose the Brazilian plant’s investment amount, production capacity, launch date or expected sales contribution, so the timing of its effect on export concentration remains unspecified.

Mexico is the second Latin American market identified for expansion, although Hero provided no country-level sales target or distribution count. In Africa, management said Hero is extremely underrepresented relative to some peer companies and planned to begin expansion through new launches and country openings in the month of the Q2 FY27 call.

The diversification plan is a response to the fact that Colombia and Bangladesh each represent close to 25% of exports, not a disclosed target for a particular regional mix. Management did not say when Brazil, Mexico or Africa could become large enough to reduce the combined importance of the two existing markets.

What is Hero’s export outlook for the second half of FY27?

Hero expects double-digit export growth in Q3 and Q4 of FY27, based on normalized Colombian operations and recovery signs in both Colombia and Bangladesh by the end of Q2. This is management’s outlook rather than a reported result, and it depends on continued improvement in the two markets that account for about half of exports.

The export recovery outlook comes alongside 10.5% year-on-year growth in Hero’s total wholesale volume in Q2 FY27. Internal-combustion-engine, or ICE, wholesale volume grew 8.4%, while electric-vehicle, or EV, wholesale volume rose 98%, showing that the company’s overall volume growth was supported by domestic and EV momentum even as exports faced market-specific disruptions.

Hero reported revenue from operations of Rs 14,687 crore in Q2 FY27, up 21% year-on-year, compared with 10.5% wholesale-volume growth. Management attributed the faster revenue increase to a 5% positive mix impact from premium ICE and EV scooters and premium variants, alongside calibrated pricing.

Hero’s FY27 capital-expenditure guidance is Rs 1,500 crore, of which close to Rs 600 crore had been deployed in the first half. Management said investment would continue behind premium products, scooters, EVs and global business, while global-business scale was one of the levers expected to help progress toward its medium-term earnings before interest, tax, depreciation and amortisation margin corridor of 14% to 16%.

Conclusion

Hero’s Q2 FY27 disruption shows how its export concentration can affect shipments: Colombia and Bangladesh each contribute close to 25% of overseas business, and concurrent problems in the two markets could not be offset by the rest of the portfolio. The expected Q3 and Q4 recovery relies on normalized Colombian clearances and the continuation of the recovery already seen in both markets at the end of Q2.

The next measure to watch is whether Hero reports the double-digit export growth management expects in Q3 and Q4 of FY27. Investors can also track the disclosed expansion plans in Brazil, Mexico and Africa, particularly the Brazilian manufacturing facility and African launches, because management has not set a date for achieving a more balanced geographic export mix.