Eicher Motors Q2 Results: Profit Drops 40% As Sales Remain Under Pressure
Net profit of the maker of Royal Enfield motorcycles fell 40.13% year-on-year to Rs 343 crore in the quarter ended September.
Eicher Motors Ltd.’s quarterly profit fell as sales continued to remain under pressure in the first full quarter of operations after India eased lockdown curbs.
Net profit for the maker of Royal Enfield motorcycles fell 40.13% year-on-year to Rs 343 crore in the quarter ended September, according to exchange filing. That compares with the Rs 334-crore consensus estimate of analyst tracked by Bloomberg.
Its revenue, too, declined 3% over the year earlier to Rs 2,134 crore, against an estimated Rs 2,094 crore.
Eicher Motors Q2 Results 2020-21: Other Highlights (YoY)
- Earnings before interest, tax, depreciation and amortisation—a measure of operational profitability—fell 13% to Rs 472 crore.
- Operating margin dropped to 22.1% from 24.7%.
India’s automakers were grappling with the worst slowdown in more than two decades even before the pandemic. The lockdown forced companies to stall operations, leading to a washout in the initial months. Sales gradually picked up from June after the country restarted most activities to revive an economy that’s headed towards a rare annual contraction in more than four decades. Automakers are now betting on a recovery during the festival season as they pushed inventory to dealers.
Sales for Royal Enfield rose 19.7% over the preceding month in September. Sales during the reported quarter, however, were down 9% year-on-year to 1,50,519 units. The company continued to witness a recovery in monthly sales as they rose 11% to 66,891 units in October.
Eicher Motors’ peer Hero MotoCorp Ltd., however, saw a rise in profit and revenue as sales jumped. Bajaj Auto Ltd., too, reported a decline in earnings and revenue on lower sales.
Eicher Motors’ commercial vehicles business, the worst-hit segment for automakers, also witnessed a monthly recovery in domestic sales. Volvo Eicher Commercial Vehicle reported a 34% jump over the preceding month in domestic sales in September. Sales, however, fell 31% year-on-year in the second quarter.
The company’s commercial vehicle sales rose 30% over the preceding month and 15.3% compared to the year earlier to 3,815 units in October.
Shares of Eicher Motors rose 0.91% before the quarterly results were announced, compared with a 0.46% drop in the benchmark Nifty 50.