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Informist, Monday, Oct. 21, 2024

 

By Darshan Nakhwa 

 

MUMBAI – Eicher Motors Ltd is expected to report healthy growth in key earnings metrics for the September quarter, estimates by brokerage firms show. The year-on-year growth will be primarily driven by higher average selling prices due to price hikes, a richer product mix, and an improvement in exports, which will help offset the impact of flattish overall volumes on account of lower two-wheeler despatches. 

 

For Jul-Sept, the two-wheeler manufacturer is expected to earn a consolidated net profit of INR 11 billion, on a top-line of INR 44.63 billion, both up 8% on year, according to the average of estimates from nine brokerages. Sequentially, the net profit is seen flat and the revenue is likely to inch up 2%. Among the estimates, the highest projection for net profit was INR 11.87 billion by Prabhudas Lilladher and the lowest was INR 10.14 billion by Nirmal Bang Equities. The highest and the lowest estimates for revenue were INR 45.66 billion by Nirmal Bang Equities and INR 43.34 billion by Yes Securities (India), respectively. 

 

"Its (Eicher Motors) Royal Enfield volume volumes were flattish for Q2 FY25. However, the mix of exports and 350+cc has improved over last year, which shall aid in strong average selling price growth leading to a revenue growth of 9.8% year-on-year," Prabhudas Lilladher said in a report. In Jul-Sept, Eicher Motors net realisation per Royal Enfield unit is seen at INR 189,100, compared to INR 171,400 in the year-ago period and INR 187,200 in Apr-Jun, as per a pre-earnings note from Motilal Oswal Financial Services.      

 

In the September quarter, the company's earnings before interest, tax, depreciation, and amortisation is estimated at INR 11.94 billion, representing growth of 10% from a year ago and 3% from a quarter ago, according to the average of eight estimates. The estimates for EBITDA ranged from INR 11.37 billion to INR 12.33 billion. 

 

According to the average of estimates from eight brokerages, Eicher Motors' EBITDA margin is expected to expand to 26.8% in Jul-Sept, from 26.4% in the year-ago period and 26.5% in the June quarter. The company is expected to report an expansion on a year-on-year basis led by a richer product mix and price hikes.

 

The New Delhi-based automaker sells two-wheelers under the Royal Enfield brand, and commercial vehicles under the Eicher and Volvo brands in India under a joint venture with the Volvo Group. In Jul-Sept, Eicher Motors reported a marginal decline in overall sales on account of a decline in two-wheeler despatches. It sold a total of 248,646 units in the September quarter, compared to 248,831 units in the year-ago period and 245,722 units in Apr-Jun. 

 

The company's Royal Enfield volumes fell marginally by 0.6% on year to 227,872 units in Jul-Sept, dragged down by a mid-single digit decline in sales of two-wheelers with engines of up to 350 cubic centimetres. The company sold a total of 193,008 two-wheelers in this segment, compared to 203,766 units in Jul-Sept 2023. In the category of up to 350cc motorcycles, the company offers models such as Bullet, Classic, Meteor and Hunter. During the quarter, the company's sales of two-wheelers with above-350cc engines surged 37% on year to 34,864 units. On a sequential basis, the company's total two-wheeler sales rose marginally by 0.8%.  

 

In Jul-Sept, the company's commercial vehicle sales rose 6% on year to 20,774 units on account of an 8-22% increase in despatches of heavy trucks, and light, medium and heavy buses. On a sequential basis, the company's commercial vehicle sales rose 5%, led by light, medium and heavy truck sales.

 

Eicher Motors has not yet announced when it will detail its Jul-Sept earnings. According to brokerages, the company's outlook for demand in India and overseas markets, and the timeline of new launches will be some of the key things to watch out for. 

 

Eicher Motors's stock has gained 11.5% since its June quarter earnings announcement on Aug 8. On Monday, shares of the company closed 1% higher at INR 4,810.45 on the National Stock Exchange.

 

Following are the Jul-Sept earnings estimates for Eicher Motors from 10 brokerage firms:

 

Brokerage firm	Net sales (INR million)	Net profit (INR million)	EBITDA (INR million)
Elara Securities (India)	44,211	10,829	11,848
Kotak Institutional Equities	44,730	10,719	11,950
Motilal Oswal Financial Services Ltd	44,319	10,759	11,865
Nirmal Bang Equities Pvt Ltd	45,663	10,136	12,329
Nomura Equity Research	44,575	11,622	11,976
Nuvama Wealth Management	44,881	11,199	11,948
Prabhudas Lilladher	45,178	11,873	12,198
Sharekhan	44,730	11,310	----
YES Securities (India)	43,343	10,558	11,366
Average	44,626	11,001	11,935

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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