EICHERMOT - Eicher Motors Ltd. Share Price

Outlook by Management:
Eicher Motors anticipates sustained growth driven by strong performance in Royal Enfield and VECV. Royal Enfield aims to expand its middleweight segment dominance in India and global markets, supported by new launches (e.g., Goan Classic, Scram 440) and electric mobility initiatives (Flying Flea EV brand). VECV targets market share gains in commercial vehicles with new products (Eicher Pro X EV) and cost management. Leadership transitions (Siddhartha Lal as Executive Chairman, Vinod Aggarwal as Vice Chairman) aim to bolster strategic direction.

Key Highlights:

1. Record Financials: Consolidated Q3 revenue at Rs.4,973 Cr (+19% YoY), PAT Rs.1,171 Cr (+17.6% YoY).
2. Royal Enfield:
   • Domestic sales up 13%, exports up 71% (27,068 units).
   • Hunter 350 crossed 500k sales; Motoverse 2024 strengthened community engagement.
   • Thailand CKD plant operational; global market leadership in key regions.
3. VECV:
   • Highest-ever Q3 sales (21,012 units); EBITDA margin improved to 8.8%.
   • Launched electric small CV platform "Pro X"; bus demand surged 17.3%.
4. EV & Sustainability: Flying Flea EV unveiled; focus on ESG (ranked top 30% globally in sustainability).
5. Leadership: Board expanded with new independent directors; S. Sandilya retired after 50 years.

Growth strategies prioritize product innovation, market expansion, and cost discipline.

Question 1: "Sir, I first wanted to understand if you look at the quarterly performance, it looks like the strategy that we outlined seems to be playing out well. We had come out with some new variants and there seems to be a pretty big response from the customer. So is this"”is this something that you intend to continue? Was this a temporary action? And then we've seen some sharp increase in other expenses in particular. So if you could just help us understand, are there any nonrecurring items or these are normalized business expenses?"

Answer: Management confirmed the growth strategy is ongoing, driven by new product launches like the Classic 650 and Battalion Black. Other expenses included ~INR70 crore in one-time costs for EV brand launches and marketing activations during Q3, with ~INR20 crore attributed to EV initiatives.

Question 2: "Just on the margin expansion over here, any more details you can share like what was the driver for margin expansion and if it's sustainable?"

Answer: VECV's margin improvement stemmed from better cost management, pricing discipline, and operational efficiencies. The company emphasized these are sustainable fundamentals, not one-time factors.

Question 3: "Can you give us some context of how the [export] markets are doing? Also, if you have some views on this tariff-related concerns which are building up."

Answer: Exports grew 71% YoY in Q3, driven by strong retail momentum in the UK, Brazil, Europe, and North America. The Thailand CKD plant supports regional growth, with no immediate tariff concerns noted.

Question 4: "Regarding the growth versus profitability pivot... have we found the right balance in terms of the value proposition to the customers and the marketing effort?"

Answer: Royal Enfield prioritizes growth through product value additions (e.g., Battalion Black) and brand-building activities. Profitability is viewed via absolute EBITDA growth, not margin percentage alone.

Question 5: "On the EV launch pipeline... what's our timeline for the launches for these brands?"

Answer: The electric brand Flying Flea (FF-C6 and FF-S6 models) is slated for market entry in early 2026. Production capacity at Vallam plant is scalable, starting at 1.5 lakh units annually.

Question 6: "How is the inventory situation in the CV industry, and how is the discounting going?"

Answer: VECV's inventory is healthy, aligned with norms. Discounts are stabilizing industry-wide due to improved pricing discipline and lower systemic pressure.

Question 7: "What kind of cost inflation might we see due to OBD2B transition, and should we expect wholesale corrections?"

Answer: OBD2B compliance will incur cost increases, but pricing actions are undecided. Transition plans are smooth, with no significant inventory disruptions anticipated.

Question 8: "Can you give us an indication of sustainable margins from hereon?"

Answer: Margin guidance wasn't provided, but management highlighted moderation in one-time launch costs (e.g., Q3's INR70 crore) and ongoing brand-building as key factors.

Question 9: "How has the customer profile changed post-Battalion Black launch?"

Answer: Battalion Black revived demand in traditional Bullet markets (North India). First-time buyers account for ~18-19% of sales, with REOWN pre-owned initiatives aiding upgrades.

Question 10: "What is the sustainable EBITDA per vehicle target amid growth focus?"

Answer: Management emphasized prioritizing absolute profit growth over margin percentages, with continued marketing investments to expand the middleweight segment.