Eicher Motors Q4 Results: Profit Falls Even As Sales Rise
An Eicher Motors Ltd. Royal Enfield Desert Storm motorcycle stands on display at the company’s Royal Enfield flagship dealership in Gurgaon, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Eicher Motors Q4 Results: Profit Falls Even As Sales Rise

Eicher Motors Ltd.’s quarterly profit fell, missing estimates, even as demand for its premium motorbikes fared better than budget models.

Net profit of the maker of Royal Enfield motorcycles fell 1% sequentially to Rs 526 crore in the three months ended March, according to its exchange filing. That compares with the Rs 566-crore consensus estimate of analysts tracked by Bloomberg.

Revenue rose 4% over the preceding quarter to Rs 2,940 crore, compared with the Rs 2,903-crore forecast.

Highlights (QoQ)

  • Operating profit fell 6% to Rs 634 crore.
  • Operating margin contracted to 21.6% from 23.8%.

This comes as Royal Enfield sold 3% more units than the preceding quarter at 2.04 lakh in the January-March period, aided by rising demand in its more than 250cc segment of bikes. That, too, when sales for peers Hero MotoCorp Ltd. and Bajaj Auto Ltd. fell sequentially as demand in rural India failed to take off. Costly fuel, high ownership expense and price hikes to counter input cost pressure, too, hurt sales of budget motorcycles.

Hero MotoCorp and Bajaj Auto saw their profit and revenue fall sequentially in the quarter ended March.

According to HSBC Global Research, higher penetration for premium motorcycles is expected to continue in the longer term, and hence a structural tailwind for Royal Enfield.

“Quality for Royal Enfield bikes has been improving significantly with every new launch and bodes well to expand the addressable market,” the research firm said in a report last month. “From a competition perspective, while there has been some impact from Jawa and HMSI (Honda Motorcycle and Scooter India Ltd.), it has not been significant so far.”

It, however, downgraded the stock even as its demand has been resilient in recent months amid an overall slowdown in the two-wheeler segment and input cost pressures.

Shares of Eicher Motors closed 0.86% lower before the results were announced compared with a 0.24% gain in the benchmark Nifty 50.

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