Eicher Motors Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

Eicher Motors started FY26 on a strong note with best-ever Q1 revenue and healthy volume growth across both Royal Enfield and VECV. Management emphasized growth over margin percentages, focusing on absolute profitability. Rural mix has risen from ~30% to ~50% of sales. Rare earth material supply issues impacted 450cc/650cc production temporarily but were resolved with alternative materials. Management is bullish on festive season with new product refreshes and marketing activations planned.

Highlights

  • Best ever Q1 consolidated revenue at INR 5,042 crores, up 14.8% YoY from INR 4,393 crores

  • EBITDA at INR 1,203 crores vs INR 1,165 crores in Q1 FY25

  • PAT at INR 1,205 crores, up 9.4% YoY (includes INR 157 crores VECV share of profit)

  • Royal Enfield sold 2,61,326 motorcycles, up 14.7% YoY; domestic sales of 2,28,779 units (11.8% growth)

  • International volumes at 32,547 units, up 41.2% YoY; strong in Brazil, SAARC markets

  • Midsize motorcycle market share at 87.3% exit rate

  • VECV recorded Q1 sales of 21,610 units (previous record 19,702); revenue INR 5,671 crores vs INR 5,070 crores

  • VECV EBITDA margin improved to 9.0% from 7.6% YoY; EBITDA at INR 511 crores, up 33%

Key financials

  1. Consolidated Revenue ₹5,042 Cr +14.8%YoY
  2. EBITDA ₹1,203 Cr +3.3%YoY
  3. PAT ₹1,205 Cr +9.4%YoY
  4. Royal Enfield Total Volumes 2,61,326 units +14.7%YoY
  5. Royal Enfield Domestic Volumes 2,28,779 units +11.8%YoY
  6. Royal Enfield International Volumes 32,547 units +41.2%YoY
  7. VECV Sales Volume 21,610 units +9.7%YoY
  8. VECV Revenue ₹5,671 Cr +11.9%YoY
  9. VECV EBITDA ₹511 Cr +32.7%YoY
  10. VECV EBITDA Margin 9%

What they filed

Q1 FY27: revenue up 31.5%, net profit up 21.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,263 4,973 5,241 5,042 6,172 +45%6,114 +23%6,080 +16%6,632 +32%
EBITDA1,088 1,201 1,258 1,203 1,512 +39%1,557 +30%1,514 +20%1,591 +32%
Net profit1,100 1,170 1,362 1,205 1,369 +24%1,421 +21%1,520 +12%1,463 +21%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Royal Enfield
    2,61,326 units Total Volumes87.3% Midsize Market Share50,000 units Bullet Q1 Sales17,500 units Hunter Monthly Run Rate
  • VE Commercial Vehicles
    21,610 units Total Sales4,580 units HD Trucks8.8% HD Truck Market Share8,610 units LMD Trucks34.5% LMD Market Share6,000 units Bus Division21.5% Bus Market Share1,436 units Exports

Guidance & targets

Capacity

  • Production capacity Capacity · FY26-27 · High confidence 1.2 million currently, ~90% utilized, modular expansion planned
    We have stated a capacity of almost about 1.2 million. And currently, we are operating at almost about 90% of that

    — B. Govindarajan

Growth Strategy

  • Volume vs margin focus Growth Strategy · FY26 · High confidence Growth and absolute profit prioritized over margin percentages
    Growth is the focus. Absolute profit, absolute growth number, absolute EBITDA, that's what is the understanding and all of us are driving

    — B. Govindarajan

Commodity Impact

  • Net commodity cost impact Commodity Impact · Q1 FY26 · High confidence 50 bps gross impact, 20 bps VAVE offset, 30 bps net
    This quarter, we've had an impact of about 50 bps. Out of that, we've got an offset because of VAVE of about 20 bps. So net impact is about 30 bps

    — Vidhya Srinivasan

Risks & concerns

  • Commodity inflation from steel, aluminum, and precious metals

    medium

    50 bps gross commodity impact in Q1 partially offset by 20 bps VAVE savings. Steel and aluminum hit earlier than expected. Precious metals pressure ongoing.

    Both acknowledged

  • Capacity constraints approaching with 90% utilization

    medium

    Operating at ~90% of 1.2 million capacity. Modular expansion planned but timelines not specific. Risk of supply not keeping up with demand during festive season.

    Analyst acknowledged

  • Overall 2-wheeler industry growth remains muted

    medium

    Indian 2-wheeler industry not on growth path; first quarter lower than envisaged. Even 125cc market hasn't grown. Only middleweight segment growing.

    Management acknowledged

  • ASEAN market weakness and Thailand macroeconomic issues

    low

    Thailand market has pressure points. ASEAN macros not strong. Company being cautious on expansion in the region.

    Management acknowledged

Areas of evasion (2)

  • Classic 650 Q1 volumes not shared
  • No forward guidance on VAVE benefits

Q&A highlights

3 direct
Rural market shift and customer demographics Direct
The mix of rural states used to be about 30% of our sales, and now it's closer to 50% of our sales... floor financing has been made available, 575 dealers signed up

Significant shift in sales mix toward rural markets indicates broadening of Royal Enfield's addressable market and potential for sustained volume growth

Asked by Pramod Kumar (UBS)

Rare earth material supply disruption and resolution Direct
We started working on the alternative material at least about three, four months back. Currently, we are back on production with the alternative material. We are out of that situation

Rare earth disruption impacted 450cc/650cc production; resolution with alternative materials removes a key supply risk

Asked by Amyn Pirani (JPMorgan)

Capacity utilization and expansion strategy Direct
Currently, we are operating at almost about 90% of 1.2 million capacity. We have cracked the code of the modular capacity enhancement

At 90% utilization, capacity addition timing is critical for maintaining growth trajectory; modular approach reduces capex risk

Asked by Chandramouli Muthiah (Goldman Sachs)

2 min read 5 chapters

Detailed narrative

Strong Q1 Start with Volume-First Strategy

Eicher Motors delivered best-ever Q1 revenue of INR 5,042 crores (up 14.8% YoY) with Royal Enfield selling 2,61,326 motorcycles (up 14.7%). Management continued to emphasize absolute profit growth over margin percentages. Bullet sold ~50,000 units in Q1, while Hunter ran at 17,000-17,500 monthly. EBITDA growth was modest at 3.3% as investments in marketing and brand building continued.

International Markets Surge 41% with Brazil and SAARC Leading

International volumes reached 32,547 units, up 41.2% YoY. Brazil is emerging as a major market with two CKD assemblers operational and finance schemes being developed. Bangladesh and Nepal in SAARC showed exceptional response. UK had some preregistered motorcycle overhang. ASEAN remained weak with Thailand under pressure, though Indonesia performed well.

Rural Mix Doubles as Premiumization Penetrates Deeper

Rural state contribution to sales has risen from ~30% to ~50%, driven by accessible products like Bullet Battalion Black and Hunter 350. Floor financing was extended to 575 dealers, predominantly rural. Urban markets also showed green shoots of growth for the first time in a while. Management plans to extend HunterHood activations to smaller towns.

VECV Posts Record Q1 with Margin Expansion

VECV achieved record Q1 sales of 21,610 units with revenue of INR 5,671 crores (up 11.9% YoY). EBITDA margin expanded significantly to 9.0% from 7.6% YoY, with EBITDA at INR 511 crores (up 33%). LMD trucks led at 34.45% market share. Bus division sold 6,000 units with 21.5% market share. Exports grew 20% to 1,436 units.

Rare Earth Supply Resolved; Commodity Headwinds Persist

Rare earth material disruption impacted 450cc and 650cc production including Himalayan, Guerrilla, and Scram. Alternative materials were developed and production resumed within 3-4 months. Commodity costs had 50 bps gross impact (steel, aluminum) with 20 bps VAVE offset. Price increases taken in April and July to partially offset inflation.

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