India’s two-wheeler market is changing fast. Petrol bikes still make up most sales, but scooters, premium motorcycles and electric vehicles are becoming more important. This means older companies now have to protect their main business while also investing in the areas that could drive future growth.
Hero MotoCorp is a good example. The company is pushing its own electric brand, VIDA, expanding EV capacity and spending heavily to gain share. Yet on August 28, it also completed the purchase of another 1.188 crore shares of Ather Energy for around Rs. 1,758 crore, taking its holding in Ather to about 32.8 percent on a fully diluted basis.
Hero now has two sizeable EV bets: one through VIDA and another through its Ather stake. In that sense, Ather can be viewed as a form of “insurance” against Hero having to get every part of its own EV strategy right.
The Old Hero Is Funding The New Hero
Hero is making these bets from a position of financial strength. In FY26, revenue stood at Rs. 46,830 crore, EBITDA at Rs. 6,871 crore and PAT at Rs. 5,268 crore. Cash flow from operations jumped 80 percent year-on-year to Rs. 9,395 crore.
Momentum remained strong in Q1FY27. Revenue grew 36 percent year-on-year from Rs. 9,579 crore to Rs. 12,999 crore. EBITDA increased 25 percent to Rs. 1,727 crore, while PAT rose 29 percent to Rs. 1,454 crore. The company also sold 16.77 lakh units during the quarter, up 23 percent from last year.
But the mix is changing. Motorcycle dispatches grew 17 percent, while scooters, including ICE and EVs, grew 107 percent. Global business dispatches rose 63 percent, while parts, accessories and merchandise revenue increased 30 percent to Rs. 1,689 crore.
Management has identified scooters, premium motorcycles, EVs, global markets and parts as areas where Hero has significant room to grow. At the same time, the company continues to strengthen its core commuter motorcycle business while investing in these faster-growing segments.
VIDA Is Becoming A Serious EV Business
VIDA retail volumes increased from 21,652 units in Q1FY26 to 57,058 units in Q1FY27, while its electric two-wheeler market share rose from 6.9 percent to 10.9 percent. By Q1FY27, VIDA was among the top two EV players in 62 towns and held more than 20 percent market share in 53 towns.
The network has also expanded to 739 dealerships across 456 cities, with access to 5,900 fast-charging points. Hero has introduced Battery-as-a-Service, allowing customers to pay for the battery based on usage, with plans starting from Rs. 0.9 per kilometre.
Hero has also guided for Rs. 1,500 crore of capex in FY27 across motorcycles, scooters, EVs, premium products and parts. It is specifically augmenting EV capacity to meet demand for VIDA, while also expanding production for Destini, Xoom and Splendor. So Hero’s larger Ather stake is not replacing VIDA. It is being built alongside it.
Hero Has Already Spent Heavily On Its Own EV Bet
Hero has already been putting significant money behind its own EV business. It disclosed EV investments of Rs. 189 crore in Q1FY26, Rs. 252 crore in Q2, Rs. 208 crore in Q3 and Rs. 220 crore in Q4. In Q1FY27, Hero said its P&L investment in VIDA stood at around Rs. 230 crore. Taken together, these quarterly figures add up to roughly Rs. 1,099 crore over five quarters.
But the important part is that this spending is now starting to produce scale. VIDA’s quarterly volume reached around 57,000 units in Q1FY27, up 26 percent sequentially, while its P&L investment remained broadly unchanged at around Rs. 230 crore. Hero said this was helped by better per-unit economics, pricing actions and Rs. 48 crore of PLI benefits during the quarter.
Hero is also increasing capacity rather than slowing down its VIDA push. The company has already completed the first leg of its EV capacity expansion and plans to further increase capacity as demand grows.
So the picture is mixed but improving. VIDA is still absorbing a meaningful amount of money every quarter, which means the EV business has not yet reached a point where it can fully support itself. However, volumes are rising, market share is improving and some models have started making positive gross margins.
This matters because Hero is making these EV investments at a time when its traditional business is also facing pressure. In Q1FY27, around 4.5 percent net commodity inflation pushed gross margin down by 300 basis points sequentially, while overall EBITDA margin fell to 13.3 percent.
And that is what makes the Ather investment more interesting. Hero is not slowing down its own EV push. It is continuing to put serious money behind VIDA while increasing its exposure to another EV company at the same time. So why is Hero backing Ather so heavily when its own EV business is already gaining ground?
Then Comes The Rs. 1,758 Crore Ather Bet
The Rs. 1,758 crore paid for additional Ather shares is larger than Hero’s Rs. 1,500 crore FY27 capex guidance. The two are different: buying shares is an investment, while capex goes into factories and other operating assets. Still, the comparison shows the size of Hero’s commitment.
And Ather itself is changing rapidly. Ather sold around 83,000 vehicles in Q1FY27, up 81 percent year-on-year. Revenue from operations increased 89 percent to Rs. 1,216.92 crore, while electric two-wheeler market share improved from 14.2 percent to 16.8 percent. Its quarterly net loss narrowed from Rs. 178.23 crore to Rs. 51.09 crore.
Ather also delivered its first positive EBITDA quarter. EBITDA came in at around Rs. 9.45 crore, with a margin of roughly 0.8 percent. It is still a small operating profit, and management cautioned that performance could move up and down, but the direction has improved sharply.
Ather Is Preparing For A Much Bigger Market
Ather’s immediate problem in Q1FY27 was not demand, but supply. Registrations more than doubled from 44,900 units to over 90,000 units, while dealer inventory fell from 14 days to three days. Management said it could potentially have sold another 13,000 to 15,000 vehicles every month if supply had been available.
Its Hosur facility has a capacity of around 4.2 lakh units annually. AURIC Phase 1 is expected to take total capacity to 9.2 lakh units, while a future Phase 2 could eventually lift this to 14.2 lakh units. Ather also discussed a total Rs. 2,500 crore fundraising plan to support capacity, suppliers and new products.
The product strategy is widening too. On August 29, Ather introduced Konarc, built on the EL platform, with prices starting at Rs. 99,999 and six variants offering range options of up to 200 kilometres. The company has positioned the scooter as a product designed to bring its technology to a wider group of Indian buyers.
Why Ather Looks Like Hero’s EV Insurance
Hero is building VIDA as its own EV business, but that also means Hero has to get several things right on its own, from products and pricing to distribution, capacity and profitability. Ather gives Hero another way to participate in the same electric two-wheeler market without depending entirely on VIDA.
And Ather is not a small side bet anymore. In Q1FY27, Ather sold around 83,000 vehicles, up about 81 percent year-on-year, while registrations more than doubled. Customer interest was also strong, with inquiries rising 95 percent and paid pre-orders increasing 158 percent.
That makes Hero’s 32.8 percent stake particularly important. If VIDA continues gaining market share and eventually becomes profitable, Hero gets the full benefit from its own EV business. But if Ather continues scaling rapidly, captures more demand and improves profitability, Hero also participates in that growth through its ownership.
So Hero is no longer relying on just one route into electric two-wheelers. It is continuing to spend on VIDA and expand its own EV capacity, while at the same time owning nearly one-third of an EV company where demand is already running ahead of supply.
That is why Ather can act like insurance for Hero’s EV plans. If VIDA does well, Hero benefits directly. If Ather grows faster and gains more market share, Hero can still benefit from that growth. So, instead of depending on just one EV brand, Hero now has two chances to win.
What Are The Experts Saying?
Analysts believe Hero MotoCorp’s decision to back both VIDA and Ather gives the company two different ways to participate in India’s EV growth story. But they also believe the real value of this strategy will depend on how these investments perform over the next few years.
Kranthi Bathini, Director, Equity Strategy at WealthMills Securities, believes the electric two-wheeler market is starting to gain momentum. He said, “EV sales were earlier in the slow lane, but they have now entered the fast lane.” He also pointed to rising waiting periods for some electric two-wheelers as a sign that demand is improving.
On Hero’s two EV bets, He said the company is “strategically” investing in both VIDA and Ather to build a stronger presence in electric two-wheelers. He noted that Ather currently has a wider presence across India, while VIDA is gradually strengthening its brand.
However, he believes one important question is still unanswered. “We need to see whether the Ather investment becomes a strategic investment or a financial investment for Hero MotoCorp over the longer term.” He added that both investments are still at an early stage and that “there is a long road to go” for India’s EV market.
Anoushka Roy, Research Analyst & Content Head at Trade Brains, believes the difference in the performance of VIDA and Ather could eventually influence how Hero allocates future capital. She said, “If Ather sustains its growth and profitability while VIDA continues to consume significant capital, Hero may find better incremental returns by increasing its exposure to Ather.”
The strategy could also matter for Hero MotoCorp’s stock. She said, “If Ather continues its momentum and becomes an EV leader while VIDA struggles, Hero would still benefit through its 32.8 percent stake in Ather.”
But the stronger stock-market outcome could come if both businesses succeed. “If both Ather and VIDA continue to grow, Hero MotoCorp could see a more meaningful re-rating,” She said. In that scenario, Hero would combine its existing ICE business with exposure to two growing EV platforms, which she believes the market could value at a premium because of the wider growth opportunity and lower dependence on a single EV bet.