- 09 Aug 2024
- ICICI Securities
Eicher Motors reports stable performance in Q1FY25, guides for pick in volumes in 9MFY25
EICHERMOT - 4737 Change: -10.15 (-0.21 %)News: 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).
Views: 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, expecting it to deliver double digit returns in medium to long term. Capital efficient business model and cash rich B/S remain structural strengths.
Impact: Positive