Portfolio

Good show by Eicher Motors

Parvatha Vardhini C | Updated on May 09, 2018 Published on May 09, 2018

Royal-Enfield-t+GQ024RH4V.3.jpg.jpg

On the face of it, Eicher Motors’ muted consolidated profit growth of less than 1 per cent in the quarter ended March 2018 ( over the March 2017 quarter) is disappointing. But, adjusted for the exceptional loss of ₹187 crore incurred on the winding up of the joint venture with Polaris during the quarter, the bottomline has shown a robust 41.2 per cent growth to ₹648. 5 crore. This has been supported by good consolidated revenue growth of 33.9 per cent to ₹ 2,528 crore ( assuming GST in the base quarter). A 55 per cent growth in ‘other income’ also did its bit to boost the bottom line. At a time when raw material costs have been inching up, consolidated operating margins expanded slightly to 31.5 per cent from 30.9 per cent a year ago. Price increases may have partly cushioned the margins. For instance, the company (Royal Enfield) took a price increase of 1 per cent in the 350cc bikes category in February 1 onwards.

Firing on all cylinders

The numbers have been supported by a good show both by Royal Enfield bikes and commercial vehicles from Volvo – Eicher. Royal Enfield posted a volume growth of 27 per cent over the March 2017 quarter. The company launched the Himalayan Sleet and the Thunderbird X during the quarter, which have seen encouraging initial response from customers. Volvo-Eicher Commerical Vehicles recorded a 33 per cent volume growth, thanks to improving economic growth after speed brakers such as demonetisation and GST.

Outlook

Improving income levels of urban consumers and growing preference for premium bikes will continue to support good offtakes at Royal Enfield. The company is the market leader in the 350cc-800 cc segment bikes with about 95 per cent share. The company will soon introduce its twin cylinder engine bikes ( 650 cc) , the Continental GT and Interceptor. It is also expanding capacity at its plant near Chennai. With consumption and industrial growth heating up, commercial vehicles across tonnages will continue to see good demand too.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on May 09, 2018
This article is closed for comments.
Please Email the Editor