But Hero Motocorp investors are hardly excited, with shares falling around 3% on the NSE in opening deals on Monday. Most have blamed the high product pricing.
Analysts point out that while the product offers some industry leading features, its positioning in the upper end segment of the scooter market may play spoilsport.
"Given that the company has launched its EV (electric vehicle) product at a premium price point (above most of the competitors), we believe the product will see limited market share gains in the EV scooter segment," analysts at Kotak Institutional Equities said in a report dated 7 October.
The report added that the high upfront cost of an EV remains one of the barriers for rapid adoption, which makes the company's pricing strategy questionable.
In a press release on 7 October, the company said that VIDA V1 is being launched in a phased manner, with the product being available for retail sales in Delhi, Bengaluru and Jaipur to begin with, and subsequently in other cities. Deliveries would start from the second week of December.
Note that electric two wheelers (E2Ws) have got a boost from increased government incentives. According to analysts at Jefferies India, the share of E2Ws in total 2W registrations has risen to 5% in Q2FY23 from 2% in FY22. The research house expects this number to rise to 9% by FY25.
"While new companies have entered the space and launched new products, we believe that incumbents are also making a good comeback and have an opportunity to leverage their brands as well as their sales and service network to emerge strong in EVs," said the Jefferies report.
Meanwhile, so far this calendar year, Hero Motocorp's stock has risen by a mere 3%. In comparison, sector index Nifty Auto has rallied by around 14%.
"The current valuations (at 14.3x FY24E EPS) largely factor in all negatives: weak demand, market share loss, and low expectations from EVs," said analysts at Motilal Oswal Financial Services Ltd in a report on 8 October. EPS is earnings per share.
However, any demand recovery (on very low base) and/or reasonable success to the EV launch can be a near-term stock price catalyst, added the report.
