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Informist, Thursday, Aug 8, 2024

 

--Eicher Apr-Jun consol net profit 11.01 bln rupees vs 9.18 bln

--Analysts saw Eicher Apr-Jun consol net profit 10.02 bln rupees

--Eicher Apr-Jun consol revenue 43.93 bln rupees vs 39.86 bln

--Eicher Motors: Apr-Jun EBITDA 11.65 bln rupees, up 14.1% on year

--Eicher: Middle-weight motorcycle sales to pick up in couple of qtrs

--CONTEXT: Comments by Eicher Motors mgmt in post-earnings concall

--Eicher: Selling 8,000-8,500 units of Himalayan, Guerrilla per month

--Eicher: Guerrilla, Himalayan mfg capacity 1.2-1.3 mln units per yr

--Eicher: Product mix, exports drove average selling price Apr-Jun

--Eicher Motors: Seeing greenshoots in international markets

--Eicher: Sales in Latin America, Europe doing well

--Eicher: Seeing pick up in sales in Asia Pacific

--Eicher: Expect CV industry sales to grow over 7% this year

--Eicher: Price management to play big role in improving CV margins

 

By Darshan Nakhwa and Sunil Raghu

 

MUMBAI/AHMEDABAD – Two-wheeler and commercial vehicle manufacturer Eicher Motors Ltd today reported better-than-expected numbers for the June quarter, with year-on-year growth recorded in key earnings metrics. Factors such as a rich product mix, higher average selling price, and moderation in commodity prices helped the company offset the impact of lower volumes on earnings for the quarter.

 

The company's consolidated net profit rose almost 20% on year to 11.01 bln rupees, surpassing analysts' estimate of 10.02 bln rupees. Other than the higher average sale price, a surge in the share of profit from the joint venture VE Commercial Vehicles Ltd and a healthy increase in other income aided growth in the metric. The share of profit from VE Commercial Vehicles was 1.74 bln rupees, up nearly 74% on year. The company's other income rose 16% on year to 2.82 bln rupees. 

 

"After a strong performance in FY24, we have started this year on a confident note, registering our best ever quarterly financial performance with both Royal Enfield and VECV reporting steady growth," Eicher Motors Managing Director Siddhartha Lal said.

 

In Apr-Jun, the company's earnings before interest, tax, depreciation, and amortisation, or EBITDA, came in at 11.65 bln rupees, up 14.1% from 10.21 bln rupees a year ago. Its EBITDA margin expanded to 26.5% in the June quarter from 25.6% a year ago, possibly helped by the softening of raw material prices, higher average selling price, and exports. Brokerages had projected the company's EBITDA at 11.30 bln rupees and EBITDA margin at 26.6%.

 

Eicher Motors reported strong growth in these metrics on the back of a healthy increase in its top line, which also outpaced the increase in expenses. The company's total revenue from operations rose nearly 10.2% on year to 43.93 bln rupees in Apr-Jun. Brokerages had estimated the company's top line to be 42.37 bln rupees.
 

In Apr-Jun, Eicher Motors' total expenses rose 9.3% on year to 34.09 bln rupees. The cost of raw materials and components consumed--the biggest expense incurred by the company--rose 5.1% to 23.44 bln rupees. Employee benefits expense rose nearly 21% on year to 3.54 bln rupees and other expenses were up over 16% to 5.18 bln rupees. Its tax outgo was 3.40 bln rupees, up 15.7% on year.

 

The New Delhi-based company sells two-wheelers under the Royal Enfield brand. It also sells trucks and buses under its joint venture with the Volvo Group, VE Commercial Vehicles. Eicher Motors holds 54.4% stake in the joint venture.

 

In the June quarter, the overall despatches of Eicher Motors--including two-wheelers and commercial vehicles--were down both annually and sequentially. The company sold a total of 245,722 units in the quarter, against 247,277 units a year ago and 253,405 units in Jan-Mar.

 

The company's Royal Enfield volumes in Apr-Jun were down on year as well as on quarter by 0.7% at 226,020 units. By comparison, the company's commercial vehicle sales were up 0.7% on year, but down just over 23% on quarter at 19,702 units. 

 

The company expects demand for mid-size motorcycles to improve in India in the coming months, and is likely to clock high-single-digit growth in the current financial year, Royal Enfield's Chief Executive Officer B Govindarajan said during a post-earnings conference call.

 

New product launches, demand during the festival season, and the current trend of premiumisation in the industry are expected to improve demand in the mid-size segment. "Premiumisation is continuing. No indicator shows this segment will not grow. I am confident that it is going to grow," he said.

 

On exports, Govindarajan said that this quarter the company reported notable performance in international markets where it is seeing "green shoots". Sales in Latin America and Europe are doing well and the Asia-Pacific region is expected to pick up.

 

Currently, Royal Enfield sells motorcycles with 350-650 cc engines. On the sales of the recently launched Guerrilla and Himalayan motorcycles, Govindarajan said the company is selling 8,000-8,500 units per month and has a manufacturing capacity of 1.2-1.3 mln units per annum.

 

On the commercial vehicle segment, VE Commercial Vehicles' Managing Director and Chief Executive Officer Vinod Aggarwal said that in the first four months of the financial year the segment did not do well because of the General Election and the monsoon. Though the segment recorded 10% growth on year in Apr-Jun, that was on the back of a low base. However, going forward, sales in the segment are expected to do well, driven by macroeconomic factors, replacement need, and festive season demand.

 

Today, shares of Eicher Motors ended nearly 0.5% lower at 4,576.90 rupees on the National Stock Exchange. The company announced its results after market hours.  End

 

Edited by Rajeev Pai

 

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