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    Eicher Motors

    EICHERMOTGood
    Automobile and Auto Components·13 Nov 2024
    Management Summary

    Eicher Motors had a busy Q2 FY25 with multiple product launches despite modest volume growth. Royal Enfield's Q2 wholesale was slightly down YoY but October achieved record 100,000+ monthly sales. The company launched Guerrilla 450, refreshed Classic 350, and debuted Flying Flea EV brand at EICMA. No price increases were taken during the year, consistent with the value-addition strategy. VECV significantly outperformed a declining CV market with 6.2% growth vs industry decline of 10.8%.

    Highlights

    8

    • Best ever Q2 revenue at INR 4,263 crores, up 3.6% YoY; EBITDA INR 1,088 crores (flat YoY)

    • EBITDA margin at 25.5% vs 26.4% YoY; PAT at INR 1,100 crores including INR 114 crores VECV share, up 8.3%

    • Royal Enfield sold ~225,000 motorcycles vs 229,496 in Q2 FY24; domestic 206,199 units; international 19,118 units

    • Best ever monthly sales of 100,000+ units in October 2024

    • Guerrilla 450 launched on Sherpa platform; Classic 350 refreshed; Bear 650 and Classic 650 launched at EICMA

    • Flying Flea EV brand debuted at EICMA with FF C6 and FF S6; launch planned for early 2026

    • VECV highest ever Q2 sales of 20,774 units, up 6.2% vs CV industry decline of 10.8%

    • New CKD facilities established in Bangladesh and second CKD in Brazil from January 2025

    What Changed1

    vs Q3 FY25

    Risks discussed3 → 4 (+1)

    Key financials

    Single quarter

    11 metrics
    1. 01Consolidated Revenue₹4,263 Cr+3.6%YoY
    2. 02EBITDA₹1,088 Cr+0.1%YoY
    3. 03EBITDA Margin25.5%
    4. 04PAT₹1,100 Cr+8.3%YoY
    5. 05Royal Enfield Total Volumes2,25,000 units-2%YoY

    Segment breakdown

    Royal Enfield
    2,25,000 Total Volumes12% International Retail Growth200 people EV Team Size28 count EV Patents Filed
    VE Commercial Vehicles
    20,774 Total Sales9,565 LMD Trucks36.5% LMD Market Share10.2% HD Market Share3,984 Bus Division1,130 Exports27% Parts Business Growth
    List

    Guidance & targets

    2
    CategoryTargetPriority
    EV
    Flying Flea launch timeline
    Early 2026
    		Medium
    Pricing
    No price increases taken
    Zero price increase for FY25
    		High

    Risks & concerns

    5
    RiskSeverity

    Royal Enfield Q2 wholesale volumes slightly below prior year

    Q2 RE volumes at ~225,000 vs 229,496 last year. Modest decline despite multiple product launches. October recovery to 100K+ is encouraging. — Analyst acknowledged

    medium

    EBITDA margin compression from no price increases and higher launch costs

    EBITDA margin at 25.5% vs 26.4% YoY. No price increases all year. INR 12 crores one-off warehousing costs. Guerrilla and Classic launch expenses in Q2. — Analyst acknowledged

    medium

    CV industry steep decline of 10.8%

    Relevant CV market shrunk 10.8% in Q2 due to election disruptions and uneven monsoons. VECV expects H2 rebound with pro-growth budget. — Management acknowledged

    medium

    EV investment ramp-up ahead of revenue

    200+ person EV team, 28 patents filed, dedicated manufacturing facility investment. Flying Flea launch not until early 2026. Heavy upfront spend with distant payoff. — Management acknowledged

    low

    Areas of Evasion(1)

    • Limited detail on margin trajectory and cost reduction plans

    Q&A highlights

    3

    “We haven't taken any price increases from last year to this year. Product mix and share in higher than 350cc reflecting in ASP”

    No price increases taken all year signals aggressive volume-first strategy; ASP decline from mix shift impacts margins

    asked by Chandramouli Muthiah (Goldman Sachs)

    1 min read5 chapters

    Detailed Narrative

    01

    Modest Q2 Despite Busy Launch Calendar

    Revenue grew just 3.6% to INR 4,263 crores with EBITDA flat at INR 1,088 crores. Royal Enfield volumes were slightly below prior year at ~225,000 units (vs 229,496). However, October broke through with 100,000+ monthly sales for the first time ever, suggesting festive momentum building. ASP moderated due to product mix shifts with no price increases taken all year.

    02

    Multiple Strategic Launches Shape Portfolio

    Guerrilla 450 launched on Sherpa platform as an urban roadster. Classic 350 refreshed with new colorways and features in August. At EICMA, Bear 650 (scrambler) and Classic 650 were launched globally. Factory custom program introduced at Thiruvottriyur plant. These launches position RE across 350cc, 450cc, and 650cc segments comprehensively.

    03

    Flying Flea EV Brand Debuts

    Flying Flea EV brand debuted at EICMA with two models: classic-styled FF C6 and scrambler FF S6. Over 200 dedicated EV team members with 28 patents filed. Launch planned for early 2026. Positioned as city mobility brand under Royal Enfield endorsement. Significant investment in capabilities and manufacturing capacity underway.

    04

    VECV Massively Outperforms Declining CV Market

    VECV achieved record Q2 sales of 20,774 units, growing 6.2% while CV industry declined 10.8%. Achieved #1 in LMD trucks with 36.5% market share and 10.2% in HD trucks. Bus sales grew to 3,984 units. Parts business surged 27%. VECV EBITDA margin was 7.1% vs 7.8% YoY as margins stayed under competitive pressure.

    05

    Global Expansion Accelerates

    New CKD manufacturing facility and flagship showroom launched in Bangladesh with response exceeding expectations. Second CKD facility in Brazil announced starting January 2025. International retail growth maintained at 12% despite macroeconomic uncertainty. LNG truck MOU signed with Baidyanath for 500 Eicher Pro 6355 units.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.