Eicher Motor Q3 Results Preview: Net profit may grow almost 30 percent on RE, CV volumes

Brokerages expect the surge in Royal Enfield volumes to support revenue growth.

Eicher Motors is expected to post robust Q3 FY24 results, with solid double-digit net profit growth and high single-digit revenue growth, aided by strong sales volumes in Royal Enfield bikes and its commercial vehicles portfolio. Eicher Motors will announce its fiscal third-quarter results on Tuesday, February 13.

According to an average of five brokerage estimates, Eicher Motors is expected to announce a 29.49 percent YoY increase in consolidated net profit to Rs 959.28 crore. Revenue may jump by 8.24 percent to Rs 4027.74 crore. EBITDA margin is also expected to rise by 319 bps to 26.19 percent.

In Q3, Eicher Motors’ total sales volume rose 3.8 percent YoY to 248,779 units. Royal Enfield volumes were up 3 percent YoY to 228,073 units while total commercial vehicle sales rose 14 percent to 20,706 units.

Brokerages expect the surge in Royal Enfield volumes to support revenue growth. Nomura expects the revenue to be up 12 percent supported by 3 percent growth in Royal Enfield volumes. According to Nuvama, better volume and realisation will support revenue growth. Prabhudas Lilladher points out that Royal Enfield's volume growth is due to increased domestic demand and a good festive season.

Also read: Eicher Motors extends losses after CLSA too downgrades the stock

Analysts also said the commercial vehicle segment by the subsidiary VE Commercial Vehicle will contribute more to the profit. Nomura expects VECV revenues to be up 20 percent YoY while Nuvama says profit growth will be robust “due to higher share of profits from CV subsidiary (VECV)”. While Margins are expected to grow in the quarter, they may contract on QoQ basis like the revenue and profits due to flat volumes and decline in exports.

According to Prabhudas Lilladher, “EBITDA margins should be flat at 23.5% due to lower export mix, advertisement spends on new launches and reversal of finished goods inventory.” Emkay Global also said the EBITDA margin would dip slightly on a quarterly basis due to flat volumes and “expenses related to the new 450cc platform launch”.

Motilal Oswal said the weaker mix with low contribution from the exports market could hurt the margins. The export volumes for Eicher Motors declined by 24 percent YoY.