Eicher Motors Limited — Q2 FY25 earnings call

Call held 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

  • 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

Key financials

  1. Consolidated Revenue ₹4,263 Cr +3.6%YoY
  2. EBITDA ₹1,088 Cr +0.1%YoY
  3. EBITDA Margin 25.5%
  4. PAT ₹1,100 Cr +8.3%YoY
  5. Royal Enfield Total Volumes 2,25,000 units -2%YoY
  6. Royal Enfield Domestic Volumes 2,06,199 units
  7. Royal Enfield International Volumes 19,118 units
  8. VECV Sales Volume 20,774 units +6.2%YoY
  9. VECV Revenue ₹5,538 Cr +8%YoY
  10. VECV EBITDA ₹395 Cr -1.7%YoY
  11. VECV EBITDA Margin 7.1%

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

Guidance & targets

EV

  • Flying Flea launch timeline EV · Early 2026 · Medium confidence Early 2026
    We are gearing up for the launch in early 2026

    — B. Govindarajan

Pricing

  • No price increases taken Pricing · FY25 · High confidence Zero price increase for FY25
    We haven't taken any price increases from last year to this year

    — Vidhya Srinivasan

Risks & concerns

  • Royal Enfield Q2 wholesale volumes slightly below prior year

    medium

    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

  • EBITDA margin compression from no price increases and higher launch costs

    medium

    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

  • CV industry steep decline of 10.8%

    medium

    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

  • EV investment ramp-up ahead of revenue

    low

    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

Areas of evasion (1)

  • Limited detail on margin trajectory and cost reduction plans

Q&A highlights

3 direct
ASP moderation and pricing strategy Direct
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)

Monthly volume trajectory and sustaining 100K+ run rate Direct
October recorded best ever monthly sales of 100,000+ units. Long-time range was 70,000-85,000 units per month

Breakthrough above historical 85K ceiling could signal structural volume step-up if sustained beyond festive

Asked by Chandramouli Muthiah (Goldman Sachs)

VECV outperformance in declining CV market Direct
VECV grew 6.2% to record Q2 of 20,774 units vs CV industry decline of 10.8%. LMD market share at 36.5%, #1 position. HD market share at 10.2%

Massive outperformance vs industry validates VECV's product strategy and distribution expansion despite market headwinds

Asked by Analyst

1 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

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