Eicher Motors Limited is expected to record a 33 percent spike in net profit for the first quarter of the current financial year on the back of favourable commodity prices, inventorisation benefits, and positive volume growth in the Royal Enfield (RE) segment.
As per the average of estimates of five brokers, the automobile major's net profit will increase to Rs 818 crore for the quarter ended June from Rs 611 crore last year.
The Indian multinational auto major will announce its first quarter results on August 3.
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The company's revenue from operations, analysts expect, is likely to rise 17 percent to Rs 3,970 crore for the first quarter. The surge is primarily due to robust RE sales. Brokerage firm HDFC Securities, in its auto sector preview, said that RE volumes have seen a strong 22 percent YoY growth in Q1.
The revenue growth is partially offset by lower average selling price (ASPs) due to a higher mix of Hunter 350 and low export volumes.
The VECV (Volvo Eicher Commercial Vehicle) segment is poised to grow with a 19 percent rise in revenues over the year-ago period, suggests broking firm Nomura. The segment is a joint venture between the Volvo Group and Eicher Motors. It comprises five business verticals – Eicher Trucks and Buses, Volvo Trucks India, Eicher Engineering Components, VE Powertrain and VECV Engine Business.
EBITDA or earnings before interest, tax, depreciation and amortisation is expected to increase to Rs 965 crore for the quarter. EBITDA margins, however, are expected to drop from 25 percent to 21 percent, as per the average of five brokers.
Eicher Motors’ July sales surged 32 percent year-on-year to 73,117 units, according to the company filing. Sales of vehicles in the up-to-350cc segment surged 39 percent year-on-year to 64,398 units.
The company's exports declined 22 percent at 7,055 units as against 9,026 units last year. Domestic sales, however, jumped 42 percent to 66,062 units as compared with 46,529 units in the corresponding month of the last fiscal.
Of late, the company has been facing stiff competition from competitors. The premium bike market has heated up with new products threatening to eat into Royal Enfield's 90 percent market share. Consequently, in early July, the company's market cap eroded by Rs 11,300 crore.
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