- 13 May 2024
- ICICI Securities
EICHER MOTORS REPORTS STABLE PERFORMANCE IN Q4FY24, GUIDES FOR DOUBLE DIGIT VOLUME GROWTH IN FY25E
EICHERMOT - 5447 Change: 27.50 (0.51 %)News: On the consolidated basis, Total operating income for the quarter came in at ₹4,256 crore (up 12% YoY) amid 4% rise in Royal Enfield sales volume at 2.3 lakh units. EBITDA in Q3FY24 came in at ₹1,129 crore with corresponding EBITDA margins at 26.5% (up 40 bps QoQ). Resultant PAT for the quarter stood at ₹1,070 crore (up 18% YoY). Share of profits from the VECV arm stood at ₹132 crore. EBITDA margins at VECV arm came in at 7.8% (down 20 QoQ) and have been lagging its peers in the recent past.
Views: Margin performance on the standalone basis (Royal Enfield franchise) was satisfactory at 27.6% (up 10 bps QoQ) amidst stable gross margin profile. Going forward management guided for healthy demand prospects amidst its successful recent launches such as Himalayan 450 & Shotgun 650. It expects industry volumes in mid-weight category to grow double digit in FY25E with RE expected to outperform. With 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 hold a positive view on the company and expects it to deliver double digit returns in medium to long term. Capital efficient business model and cash rich B/S remain structural positives.
Impact: Positive