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Eicher Motors: Reports stable performance in Q1FY25, guides for pick in volumes in 9MFY25

ICICIdirect Research 09 Aug 2024 DISCLAIMER
  • On the consolidated basis, Total operating income for the quarter came in at ₹4,393 crore (up 10% YoY) amid flattish Royal Enfield sales volume at 2.26 lakh units.
  • EBITDA in Q1FY25 came in at ₹1,165 crore with corresponding EBITDA margins at 26.5% (flat QoQ). Resultant PAT for the quarter stood at ₹1,102 crore (up 20% YoY).
  • Share of profits from the VECV arm stood at ₹175 crore for the quarter (includes tax credit as well). EBITDA margins at VECV arm came in at 7.7% (down 10 QoQ).
  • Margin performance on the standalone basis (Royal Enfield franchise) was satisfactory at 27.9% (up 30 bps QoQ) amidst ~50 bps expansion in gross margin profile. Margins for the quarter were supported by benign commodity prices as well as better product mix with share of >350cc segment increasing from 11% in Q1FY24 to 14% in Q1FY25.
  • Management expects mid-weight premium motorcycle segment to grow high single digit in FY25E. Moreover, the recent successful launches like Guerilla 450, Himalayan 450 & Shotgun 650, are expected to drive revenue growth and margin appreciation in the coming quarters.
  • With the rebasing of margins and healthy growth prospects, valuations are reasonable at Eicher Motors at 2-year forward PE of ~25x vs. its long period average of ~30x. Consequently, we maintain a positive outlook on the company 
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