EICHERMOT - Eicher Motors Ltd. Share Price

Management's outlook for Eicher Motors reflects confidence in continued growth across both Royal Enfield and VECV divisions. Management anticipates maintaining momentum, leveraging new product launches and market expansions, especially in international markets.

For FY '26, Royal Enfield aims for a similar growth trajectory as it surpassed 1 million motorcycles sold for the first time, marking a 10% year-on-year increase. The domestic motorcycle sales saw a rise to 902,757 units, up 8% year-on-year, while international volume reached 30,900 units in Q4, up 29.7%, contributing to a total of 100,136 units for the year. The new motorcycle models, including Bear 650 and Guerrilla 450, are expected to attract diverse customer segments.

On the VECV front, management noted a strong performance with over 90,000 trucks and buses sold, driving revenues up to Rs. 23,548 crores, reflecting a 7.7% increase year-on-year. The company reported an EBITDA margin improvement to 10.5% in Q4, indicating effective cost management and the successful introduction of new variants, including an electric small commercial vehicle.

Key forward-looking points include:

• Strong demand for mid-weight motorcycles, maintaining an 88% market share in that segment.
• Strategic international expansions, eyeing growth in markets like Brazil and Bangladesh.
• Continued focus on electric mobility, with new models showcased and expected launches.
• Sustainability efforts highlighted by significant reductions in emissions and the establishment of environmentally friendly practices.

Overall, the management remains optimistic about sustaining growth driven by new product launches, favorable market conditions, and ongoing modernization of its operations.

Q1: Could you comment on the margins, particularly regarding raw material to sales trend and OBD2B costs?

A1: We noted a quarter-over-quarter impact of approximately 30 bps on margins due to model mix, with strong sales of models like Battalion Black. Additionally, there was a 20 bps impact from rising steel and aluminum prices. As for OBD2B costs, we passed on these costs to consumers; however, profitability remains focused on absolute growth rather than percentage margins.

Q2: What is your outlook for FY '26 for domestic and international Royal Enfield and VECV?

A2: For Royal Enfield, we expect continued growth, particularly with urban market sentiment improving post tax cuts. We reached over 1 million motorcycles sold, and anticipate good performance following new launches. For VECV, market growth should continue due to a strong economy and infrastructure investments. We expect our share in the commercial vehicle market to strengthen further.

Q3: Could you provide export revenue figures and non-motorcycle revenue for the full year?

A3: Our international market share is 13.5%, and non-motorcycle revenue accounts for approximately 14.8% of total sales, combining both domestic and international figures.

Q4: What are your thoughts on gross margins and operating leverage for VECV?

A4: Improvements in VECV margins stem from better price management, operating leverage, and cost control strategies. We are focused on reducing discounts, increasing transaction prices, and improving product mix to sustain margin growth.

Q5: What is the expected CAPEX and new launches planned for next year?

A5: We anticipate a CAPEX of Rs. 1,200-1,300 crores next year, primarily directed towards EV facilities and new product development. Specific launch details will be shared closer to the launch dates, though we remain committed to expanding our product portfolio.

Q6: How has the customer profile for Royal Enfield shifted over the past years?

A6: The customer base has notably shifted younger, with average age dropping to around 24-26 for products like Hunter. About 61% of buyers are now under 35 years, reflecting our success in attracting first-time buyers and younger customers through targeted product offerings.

Q7: What steps are you taking to expand capacity as sales increase?

A7: Our current capacity is 1.2 million units. We plan capacity enhancements as needed, particularly through CAPEX investments toward us supporting new model launches while leveraging our modular manufacturing approach.

These summarized Q&A pairs highlight the key financial metrics, market conditions, and strategic directions from the earnings call transcript, while remaining concise within the 500-character limit per answer.