Eicher Motors Ltd, a key player in the automotive industry, is renowned for its iconic Royal Enfield motorcycles and commercial vehicles. The company has a significant presence in the mid-size motorcycle segment and is known for its robust engineering and premiumisation of the two-wheeler market.
In addition to motorcycles, Eicher Motors, through its joint venture with Volvo, operates VE Commercial Vehicles (VECV), a leading player in the commercial vehicle space.
The first quarter of FY 2024-25 has been a remarkable period for Eicher Motors, with the company delivering strong financial results that surpassed market expectations. Let’s delve into the details of Eicher Motors’ Q1 performance.
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Eicher Motors’ Q1 highlights
Eicher Motors reported a consolidated net profit of ₹1,101 crore for the quarter ended June 30, 2024. This marks a significant 20% year-on-year (YoY) increase from ₹918 crore in the corresponding quarter of the previous fiscal year.
This strong growth was driven by favourable commodity prices, inventory benefits, and positive volume growth in the Royal Enfield segment.
The company’s total revenue from operations also witnessed a healthy rise, reaching ₹4,393 crore, up by 10% compared to ₹3,986 crore in the same quarter last year. This increase in revenue was well above analysts’ expectations, who had projected a revenue figure of ₹4,207 crore for the quarter.
Eicher Motors’ EBITDA Growth and Margins
Eicher Motors continued its strong performance at the operating level as well. The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 14.1% to ₹1,165.5 crore in Q1 FY25, up from ₹1,021 crore in Q1 FY24.
The EBITDA margin stood at 26.5%, an improvement from the 25.6% margin recorded in the same quarter last year. This margin expansion reflects the company’s strategic pricing actions and efficient cost management.
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Royal Enfield: Eicher Motors’ Crown Jewel
The Royal Enfield segment remains the cornerstone of Eicher Motors’ success. In Q1 FY25, Royal Enfield recorded sales of 2,27,736 motorcycles, slightly up from 2,25,368 units sold in the same period last year.
This steady volume growth, coupled with the launch of new models like the Guerrilla 450, has strengthened Royal Enfield’s position in the mid-size motorcycle segment.
Siddhartha Lal, Managing Director of Eicher Motors, expressed confidence in the company’s future, citing a robust product pipeline that includes the upcoming launch of the 2024 Classic model.
Lal emphasised that the company’s strong start to FY25 is a testament to its strategic initiatives and product innovation.
VE Commercial Vehicles: A Steady Performer for Eicher Motors
Eicher Motors’ joint venture, VE Commercial Vehicles (VECV), also contributed to the company’s strong Q1 performance. VECV reported revenue from operations of ₹5,070 crore, marking a modest 1.8% increase over ₹4,980 crore in the corresponding quarter of the previous fiscal year.
VECV’s EBITDA for the quarter stood at ₹385 crore, slightly lower than the ₹387 crore reported in the same period last year. However, the segment’s profit after tax showed significant growth, rising to ₹319 crore from ₹181 crore in Q1 FY24.
VECV recorded sales of 19,702 vehicles, a marginal increase from the 19,571 vehicles sold in the previous year.
Vinod Aggarwal, MD and CEO of VECV, highlighted the strong sales performance in Q1 FY25, attributing it to the company’s focus on delivering uptime to customers and expanding its service and parts network.
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Quarterly results (Amount in Cr):
| Quarterly | Mar 2024 | Dec 2023 | Sep 2023 | Jun 2023 | Mar 2023 |
| Sales | 4,231 | 4,192 | 4,054 | 3,930 | 3,901 |
| Other Income | 417 | 307 | 249 | 275 | 335 |
| Total Income | 4,648 | 4,499 | 4,303 | 4,206 | 4,236 |
| Total Expenditure | 3,210 | 3,191 | 3,077 | 2,964 | 3,023 |
| EBIT | 1,437 | 1,307 | 1,226 | 1,242 | 1,212 |
| Interest | 4 | 5 | 5 | 4 | 3 |
| Tax | 345 | 318 | 307 | 299 | 295 |
| Net Profit | 1,088 | 983 | 913 | 938 | 913 |
Eicher Motors’ Stock Performance
Eicher Motors’ strong Q1 results had a positive impact on its stock performance. Following the announcement of the results, the company’s share price surged by 5%, making it the top gainer in the Nifty 50 index. The stock reached an intra-day high of ₹4,839.90 on the NSE, reflecting a 5.43% jump.
Brokerage firms have largely maintained a positive outlook on Eicher Motors, with target prices reflecting significant upside potential. Jefferies, UBS, and Goldman Sachs have all issued ‘Buy’ ratings, with target prices ranging from ₹5,550 to ₹5,820, citing the company’s strong product pipeline and the benefits of premiumisation in the two-wheeler segment.
However, not all analysts are bullish. Investec has maintained a ‘Sell’ rating with a target price of ₹3,910, pointing to the intensifying competition in the premium two-wheeler market and a potentially rich valuation.
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Outlook
Looking ahead, Eicher Motors is well-positioned to capitalise on the growing demand in both the motorcycle and commercial vehicle segments. The company’s focus on premiumisation, product innovation, and expanding its global footprint is expected to drive sustained growth in the coming quarters.
The upcoming launch of the 2024 Classic model and other new offerings in the Royal Enfield lineup are likely to bolster the company’s market share and financial performance.
Moreover, the ongoing recovery in the commercial vehicle sector, coupled with strategic initiatives at VECV, should contribute to Eicher Motors’ overall growth trajectory.
In summary, Eicher Motors’ Q1 FY25 performance underscores its resilience and strategic acumen in navigating market challenges and capitalising on opportunities.
With a strong product pipeline and a clear focus on premiumisation, the company is poised for continued success in the automotive sector.
