Eicher Motors Q1 Results Highlights: Net Profit Up 20%; Outperforms Expectations

Eicher Motors Q1 Results Highlights

Eicher Motors Limited (EML) reported a consolidated net profit of ₹1,101 crore for the quarter ending June 30, 2024, marking a 20% increase on a year-on-year (YoY) basis. This growth was driven by favorable commodity prices, inventory advantages, and strong volume growth in the Royal Enfield (RE) segment. In the corresponding quarter last year, the company had posted a Profit After Tax (PAT) of ₹918 crore.

The company’s total revenue from operations reached ₹4,393 crore, reflecting a 10.2% rise compared to ₹3,986 crore in Q1 FY24.

These results surpassed analysts’ expectations, as the average forecast from seven brokerage firms had predicted the company’s net profit to be ₹991 crore and revenue to be ₹4,207 crore for the quarter ending June 30, 2024.

The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 14.1%, reaching ₹1,165.5 crore in Q1 FY25, up from ₹1,021 crore in Q1 FY24. The EBITDA margin improved to 26.5% in the June quarter, compared to 25.6% in the same period last year.

Royal Enfield, a major division of Eicher Motors, sold 2,27,736 motorcycles in Q1 FY 2024-25, a slight increase from the 2,25,368 motorcycles sold in the same period of FY 2023-24.

During the same period, VECV, another division of Eicher Motors, reported a revenue from operations of ₹5,070 crore, a 1.8% increase from the previous year’s revenue of ₹4,980 crore. EBITDA for the first quarter stood at ₹385 crore, slightly down from ₹387 crore the previous year. Profit after tax rose to ₹319 crore, compared to ₹181 crore in the prior year. VECV recorded sales of 19,702 vehicles in FY25, up from 19,571 vehicles in FY24.

Impact on Eicher Motors Share Price Post Q1 Results

Over the past month, Eicher Motors' stock has decreased by 3.3% and remained flat over the past three months. On August 8, the stock closed 0.46% lower at ₹4,578.80 per share, while the BSE Sensex ended the day down by 0.73% at 78,886.22 points.

The Bullet 350 model experienced a 14% decline in volume during Q1FY25, indicating limited acceptance of the updated version. Similarly, the Hunter 350, launched in FY23, saw an 8% drop in volume. The company is facing increasing competition from Bajaj-Triumph, Hero-Harley, TVS Motor (Ronin), Honda, and Classic Legends (Jawa). According to analysts from Nuvama, Eicher Motors' domestic volume fell by 1% in Q1FY25, whereas the industry overall grew by 20%.

Emkay analysts also pointed out that the Guerrilla model has received a lukewarm response, suggesting that Eicher Motors may encounter structural growth challenges, with recovery likely to be gradual.

Analysts predict that demand for commercial vehicles (VECV) might slow down due to a high base, reduced infrastructure spending, and the diminishing effects of pent-up demand. As a result, Nuvama forecasts a modest revenue/EBITDA compound annual growth rate (CAGR) of 4%/8% for FY24–27.

Looking ahead, the company expects that the middleweight segment, which is its core market, will see high single-digit growth in FY25, a slowdown from the double-digit growth rates seen previously. To boost growth, Royal Enfield has planned several product updates, including the recently introduced Guerrilla 450, and intends to ramp up marketing efforts, particularly for the Hunter model, according to Emkay.

Nuvama analysts foresee continued underperformance for Eicher Motors, projecting a 3% volume CAGR in the domestic market from FY24 to FY27. This outlook is due to niche product launches with limited volume potential and increased competition from Bajaj-Triumph, Hero-Harley, TVS Motor (Ronin), Honda, and Classic Legends (Jawa). They estimate a 7% revenue CAGR and a 10% earnings CAGR over FY24–27, maintaining a 'Hold' rating with a target price of ₹4,600, based on a P/E ratio of 26x for Royal Enfield and 20x for VECV.

About Eicher Motors

Eicher Motors Limited (EML) is an Indian multinational automotive company with a diverse portfolio that includes both motorcycle and commercial vehicle manufacturing. The company is involved in the production and sale of motorcycles, spare parts, and related services. EML is best known for manufacturing the iconic Royal Enfield brand, which dominates the premium motorcycle segment in India.