Riding Strong, Scaling Higher
Eicher Motors Ltd (EML) manufactures motorcycles and accessories under the Royal Enfield brand. It also has a joint venture with AB Volvo, Volvo Eicher Commercial Vehicles (VECV).
Key Highlights
• Eicher motors reported an 18.8% YoY revenue growth, reaching Rs. 4,888cr, driven by strong performance in the motorcycle segment and higher sales volume in VECV.
• In Q3FY25, total sales of Eicher trucks and buses grew 1.2% YoY to 20,305 units, driven by a 12.3% increase in Light and Medium Duty (LMD) bus sales to 3,151 units and 44.5% surge in exports to 1,192 units.
• In Q3FY25, Royal Enfield reported a 19.4% YoY growth in motorcycle sales for models with engine capacities up to 350cc and above, reaching a total volume of 272,297 units. In addition, the company’s international business demonstrated exceptional growth, surging 106.2% to 30,284 units, driven by strong global demand.
• The company’s financial performance has been robust, with EBITDA increasing 10.2% YoY to Rs. 1,201cr, driven by strong top-line growth. However, the EBITDA margin contracted 190bps YoY to 24.6%.
• Reported PAT increased 17.6% to Rs. 1,171cr, supported by strong revenue growth.
OUTLOOK & VALUATION
The company reported strong Q3FY25 performance, driven by market share gains and new product launches. It scaled Flying Flea EV capacity to 1.5lakh units annually, with flexibility for future demand. The collaboration with Spain’s Stark Future SL strengthened EV technology advancements, while expansion into Bangladesh and Brazil supported global growth. The management anticipated continued demand and volume momentum, supported by product and marketing strategies. Therefore, we have upgraded our rating on the stock from HOLD to BUY, with a rolled forward target price of Rs. 5,665 based on the sum-of the-parts (SOTP) valuation.
