Eicher Motors Q4 results: Royal Enfield shines; bottomline below estimates

Last updated: 31 May, 2021 | 11:02 am

Eicher Motors Q4 results: Royal Enfield shines; bottomline below estimates
  • Net profit & revenue: Eicher motors reported a 73 percent year-on-year rise in its consolidated net profit to Rs 526.14 crore and total revenue climbed 33 percent on-year to Rs 2,940.3 crore for the quarter ended March, which was slightly below analysts’ estimates.
  • Royal Enfield numbers: RE  recorded a  25%  on-year increase in its volumes sold to 2.03 lakh units. Royal Enfield saw a good increase in demand in the second half of the year, both from rural as well as urban segments. The company said that its latest model ‘Meteor’ is seeing an excellent response from the customers.
  • VECV numbers: The quarterly revenue & PAT  came at  Rs.3,602 cr and 127 cr respectively.  For Jan-Mar 21 period, VECV saw robust growth of 56% on-year to 18,167 units. During the quarter the company has seen a strong rebound in the medium and heavy-duty segment on account of good pickup in economic activities. 
  • Margins: EBITDA margin contracted to 21.6% from 23.8% in the previous quarter. EBITDA (overall) fell 6% on-quarter to Rs 634 crore.  
  • Dividend: The company’s board also approved a final dividend of Rs 17 per share for the financial year ended March 31, 2021.
  • Industry Challenges: Management indicated 3 major challenges for the company. The global microchip and semiconductor parts shortage, local lockdowns, and sudden two-week additional lockdown in Tamil Nadu consequently leading to a 3-day plant shutdown.  

Although doing significantly better in FY21 than in FY20, Eicher is still far from the pre covid numbers in terms of margins and volumes. For Royal Enfield, the company expects even higher exports to American markets due to lesser lockdowns and the Indian demand although came back swiftly, the sales took time to catch up to the demand owing to supply chain issues and gradual ramp-up of production. In the VECV segment, the company realized high market share and EBITDA margin gains due to the company's BS-VI product portfolio being a standout performer in the industry. Further, Eicher Motors is seeing significant recovery in the trucking segment. Still, to reach pre covid numbers, Eicher will have to ramp up RE sales in American markets where covid effects are almost gone and for the domestic market, it will have to, unfortunately, rely on the status of vaccination drives for the economy to pick up sustainably.

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