Q1 lifts Eicher Motors to new high, Citi ups target to Rs 25000

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Stellar quarterly performance of Royal Enfield and commercial vehicle (CV) segments drove Eicher Motors shares to all-time high of Rs 22,382.15, up more than 6 percent intraday Friday.

The key highlights of its earnings were strong operational improvement in both Royal Enfield and CV business, highest ever Royal Enfield's margin at 30.8 percent, improvement in CV margin by 90 basis points YoY to 9.1 percent and rise in market share of its CV business to 15.1 percent from 13.2 percent YoY.

With retaining buy rating and raising target price to Rs 25,000 from 22,000 on the stock, Citi increased its Royal Enfield earnings estimates by 7-15 percent over FY17-19 driven by expectations of a strong uptick in margins as volumes increase further, though it reduced VE Commercial Vehicles' EBITDA estimates by 9-10 percent given more modest outlook on average selling prices.

The brokerage says as VECV launches more models in the lower tonnage segment, there is likely to be a structural downward shift in average selling prices. That said, it could be offset by higher market share in the heavier trucks driven by the new Pro series.

"We would look out for the potential of export markets, especially since the company has now opened two marketing subsidiaries in Brazil and North America," says the brokerage.

Royal Enfield (standalone business) has registered a solid 70 percent growth in profit at Rs 337 crore and 42 percent in revenue on yearly basis. Operating profit shot up 68 percent, and margin has seen expansion of 480 basis points at 30.8 percent, which is likely to inch up further given economies of scale at the vendors' end and ramp up in capacity, Citi says.

Eicher Motors has already guided to increase production to 6.75 lakh units of Royal Enfield in FY17 and 9 lakh by FY19.

During the quarter, it has expanded Royal Enfield dealer network to 566 dealerships across country and opened stores in Manila, Phillipines, one of the biggest 2-wheeler markets globally.

Realisations per unit increased 2.7 percent YoY to 1.05 lakh.

VECV business too has reported strong growth with profit rising 40.3 percent and revenue 20 percent on yearly basis in Q1. Operating profit growth was 32.4 percent and margin expansion stood at 90 basis points.At 11:27 hours IST, the scrip of Eicher Motors was quoting at Rs 21,807.00, up Rs 731.80, or 3.47 percent amid high volumes on the BSE.Posted by Sunil Shankar Matkar