Eicher Motors Limited — Q4 FY25 earnings call

Call held 14 May 2025

Management summary

Eicher Motors delivered a landmark FY25 with Royal Enfield crossing 1 million motorcycles and international volumes exceeding 100,000 units for the first time. Management's volume-first strategy continued with 1.15% price increase taken in April on select models. VECV posted record performance with significant margin expansion. Key leadership changes saw Siddhartha become Executive Chairman and B. Govindarajan elevated to MD of Eicher Motors. Capex guided at INR 1,200-1,300 crores for FY26, focused on EV manufacturing facility.

Highlights

  • Record Q4 consolidated revenue of INR 5,241 crores; EBITDA INR 1,258 crores; PAT INR 1,362 crores

  • Full year FY25 revenue INR 18,870 crores; EBITDA INR 4,712 crores; PAT INR 4,734 crores

  • Royal Enfield crossed 1 million motorcycle sales for first time: 10,02,893 units in FY25, up 10% YoY

  • Q4 Royal Enfield sales of 2,80,801 units, up 23.2% YoY; domestic at 9,02,757 for FY25 (up 8%)

  • International volumes crossed 1,00,136 units for FY25, up 29.7% YoY; #1 in UK middleweight

  • VECV record FY25 sales of 90,161 units; revenue INR 23,548 crores, up 7.7% YoY

  • VECV Q4 EBITDA margin at 10.5% vs 7.8% YoY; full year 8.8%; PAT up 56.8% for FY25

  • VECV achieved #1 position in LMD trucks with 36% market share

Key financials

3 periods

Headline

  • VECV FY25 Sales
    90,161 units
    YoY +5.4%
  • VECV FY25 Revenue
    ₹23,548 Cr
    YoY +7.7%
  • VECV Q4 EBITDA Margin
    10.5%
  • VECV FY25 EBITDA
    ₹2,030 Cr
    YoY +18.4%

Q4

  • Consolidated Revenue
    ₹5,241 Cr
  • EBITDA
    ₹1,258 Cr
  • PAT
    ₹1,362 Cr
  • RE Volumes
    2,80,801 units
    YoY +23.2%

FY25

  • Revenue
    ₹18,870 Cr
  • EBITDA
    ₹4,712 Cr
  • PAT
    ₹4,734 Cr
  • RE Total Volumes
    10,02,893 units
    YoY +10%
  • RE Domestic Volumes
    9,02,757 units
    YoY +8%
  • RE International Volumes
    1,00,136 units
    YoY +29.7%

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
    10,02,893 units FY25 Total Volumes88% Midsize Market Share13.5% International Revenue Share14.8% Non-Motorcycle Revenue Share
  • VE Commercial Vehicles
    90,161 units FY25 Sales6,765 units Q4 HD Trucks9.1% Q4 HD Market Share11,591 units Q4 LMD Trucks37.1% Q4 LMD Market Share7,568 units Q4 Buses8.8% FY25 EBITDA Margin₹1,284 Cr VECV FY25 PAT

Guidance & targets

Capital Expenditure

  • FY26 Capex Capital Expenditure · FY26 · High confidence INR 1,200-1,300 crores
    CAPEX to be between Rs. 1,200-Rs. 1,300 crores next year, which is largely towards investment in EV manufacturing facility, product development

    — Vidhya Srinivasan

Growth Strategy

  • Pricing approach Growth Strategy · FY26 · High confidence 1.15% price increase on select models in April

    Previously No price increase in FY25 → 1.15% price increase on select models in April

    We have taken about 1.15% increase in some select models in April

    — Vidhya Srinivasan

Capacity

  • Production capacity Capacity · FY26 · High confidence 1.2 million, modular expansion planned
    Our capacity is about 1.2 million... all our manufacturing facilities are done in a modular way

    — B. Govindarajan

Risks & concerns

  • US tariff uncertainty impacting international expansion

    medium

    US tariffs initially exceeded 90-day break levels. Pre-tariff inventory protected riding season. MSRP not changed. Watching tariff discussions closely.

    Both acknowledged

  • Commodity price volatility in steel, aluminum, and rare earth

    medium

    20 bps QoQ commodity impact from steel and aluminum. Significant volatility making outlook difficult. Rare earth concerns emerging.

    Both acknowledged

  • Margin compression from value-addition strategy without proportionate pricing

    medium

    Management adding features to products (Battalion Black, Classic 350 refresh) without fully passing on costs. Value engineering expected to provide offset over time.

    Analyst acknowledged

  • European distributor liquidations causing one-off costs

    low

    INR 19 crores charge for distributor liquidation settlement expenses in Europe. Company transitioning to own distribution in some European markets.

    Management acknowledged

Areas of evasion (1)

  • VECV double-digit margin timeline guidance declined

Q&A highlights

2 direct
Margin vs volume trade-off and gross margin drivers Direct
30 bps on account of model and variant mix (Battalion Black), 20 bps commodity impact (steel/aluminum), 20 bps inventory provisions for old bikes... focus is on absolute growth and absolute gross profit growth

Detailed QoQ margin bridge revealing conscious value-over-price strategy with specific product-level impacts

Asked by Binay (Morgan Stanley)

VECV margin improvement sustainability Partial
This is the combined result of better price management, operating leverage as well as cost management... consistent focus on improving transaction prices and reducing discounts

VECV Q4 EBITDA margin jumped to 10.5% from 7.8% YoY; sustainability of this improvement is key to valuation

Asked by Amyn Pirani (JPMorgan)

FY26 growth outlook across segments Direct
With the tax cut, especially income tax cut, we expect the urban growth will start coming up. Rural market has continued to grow. Premiumization is continuing. Growth will be good for us

Management expects urban revival from income tax cuts to complement already strong rural growth, supporting continued volume expansion

Asked by Chandramouli Muthiah (Goldman Sachs)

2 min read 5 chapters

Detailed narrative

Landmark FY25 Crosses Million-Unit Milestone

Royal Enfield sold 10,02,893 motorcycles in FY25, crossing 1 million for the first time ever, up 10% YoY. Domestic sales were 9,02,757 units (up 8%) while international volumes hit 1,00,136 units (up 29.7%). Q4 alone saw 2,80,801 units, up 23.2% YoY. Six new motorcycles were launched during the year including Bear 650, Guerrilla 450, and Classic 650.

Volume-First Strategy with Measured Price Increases

After no price increases in FY25, management took 1.15% increase on select models in April FY26. Q4 gross margin impacted by 30 bps from model mix (more Battalion Black), 20 bps from commodity costs, and 20 bps from inventory provisions. Marketing spend reduced INR 30 crores QoQ from Q3 one-offs but remains elevated. Value engineering pipeline expected to provide margin tailwind.

VECV Records Best-Ever Year with Margin Breakthrough

VECV sold 90,161 units in FY25 (up 5.4% vs flat market), achieving #1 in LMD trucks at 36% market share. Revenue reached INR 23,548 crores (up 7.7%). EBITDA margin expanded to 10.5% in Q4 (from 7.8%) and 8.8% for FY25. PAT surged 56.8% to INR 1,284 crores. Improvement driven by better price management, reduced discounts, and operating leverage.

International Expansion with CKD Strategy

International volumes crossed 100,000 for FY25 with 13.5% revenue share. Brazil emerging as key market with 22,000+ units and #3 position; second CKD assembler added. Himalayan launched in Brazil to strong reception. Thailand CKD plant inaugurated. Bangladesh operations started. US tariff managed through pre-tariff inventory at Dallas warehouse.

Leadership Transition and Capital Allocation

Siddhartha Lal moved to Executive Chairman role; B. Govindarajan became MD of Eicher Motors; Vinod Aggarwal appointed Vice Chairman. FY26 capex guided at INR 1,200-1,300 crores, primarily for EV manufacturing facility and product development. Dividend payout improved with board open to further increases based on performance. Plants consume 86% renewable electricity.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Automobile and Auto Components earnings calls