- 14 Nov 2024
- ICICI Securities
REPORTS STEADY PERFORMANCE IN Q2FY25; GUIDES HEALTHY PERFORMANCE FOR H2FY25
News: 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). Resultant PAT for the quarter stood at ₹1,100 crore (up 8.3% YoY). Share of profits from the VECV arm stood at ₹114 crore with EBITDA margins at 7.1% (down 50bps QoQ).
Views: Margin performance on the standalone basis (Royal Enfield franchise) came in below our expectations at 26.3% (down 150 bps QoQ) amidst high other expenses. The share of >350 cc segment was at ~10% in Q2FY25 (flat YoY). However, the management remained firm with guidance of high single digit growth rate in the mid-weight premium motorcycle category for FY25E. Moreover, the 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 in the coming quarters. Hence, 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.
Impact: Positive