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Eicher Motors: Reports steady performance in Q2FY25; Guides healthy performance for H2FY25

ICICIdirect Research 14 Nov 2024 DISCLAIMER

On the consolidated basis, total operating income for the quarter came in at ₹4,263 crore (up 4% YoY) amid flattish Royal Enfield sales volume at 2.27 lakh units. EBITDA in Q2FY25 came in at ₹1,088 crore with corresponding EBITDA margins at 25.5% (down 101bps QoQ).

Share of profits from the VECV arm stood at ₹114 crore with EBITDA margins at 7.1% (down 50bps QoQ). Resultant PAT for the quarter stood at ₹1,100 crore (up 8.3% YoY).

Recent successful launches like Guerilla 450, Bear 650, Classic 650 and newly introduced electric vehicle brand, Flying Flea with models like the Classic-styled Flying Flea C6 and Scrambler-styled Flying Flea S6, are expected to drive revenue growth and margin appreciation going forward.

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 for the company.  

EIM expects strong growth in the second half of FY25. It is optimistic about a rebound in commercial vehicle demand, driven by government infrastructure investments and continued momentum in Royal Enfield sales, particularly with new product introductions and festive-season demand.

Our last rating on the company was BUY with a target price of ₹ 5,750, on SoTP basis (30x PE to RE business & 25x PE to VECV arm- FY26E).

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