Eicher Motors Ltd on August 10, is likely to report a strong year-on-year improvement in its performance with its consolidated profit after tax (PAT) likely to increase by 152 percent. Compared to the previous quarter, the growth in PAT is forecasted at about 9 percent.
Consolidated revenue for the quarter is expected to jump 68 percent over the corresponding period last year. On a sequential basis, revenue is likely to post a mid-single digit rise.
The maker of the iconic Royal Enfield motorcycle, Eicher Motors is expected to report a consolidated PAT of Rs 598 crore on consolidated revenue of Rs 3,315 crore for the quarter, according to an average of estimates of six brokerages polled by Moneycontrol.
The year-on-year growth is seen to be driven by higher exports, an increase in volumes at Royal Enfield, and higher average realisation due to the price hike undertaken by the company in May. Also, softening of metal prices augur well for margins.
The company sold 1,87,000 units of Royal Enfield motorcycles during the quarter, registering a growth of 51.4 percent on an annualised basis. The average realisation is predicted to have grown around 12,9 percent year-on-year to approximately Rs 1,74,200 per unit. On a sequential basis, realisations are likely to remain flat with a marginal improvement of 1.2 percent.
“RE (Royal Enfield) volumes have increased 1 percent QoQ (quarter-on-quarter) as well as YoY (year-on-year) wherein exports increased by 17 percent on quarter and by 59 percent on the year while the domestic volumes dipped 2 percent on quarter but jumped 50 percent on the year,” said a report from Equirus Securities.
Export ramp-up has been strong, with 56 percent year-on-year growth while the domestic volume ramp-up continued to be impacted by a shortage of semiconductors.
“We expect revenues to increase by 4 percent QoQ in Q1FY23 led by 1 percent QoQ increase in ASPs (average selling price) due to price hikes taken in May 2022 and 1 percent QoQ increase in volumes,” said a report from Kotak Institutional Equities.
Brokerages expect EBITDA (earnings before interest, tax, depreciation, and amortisation) margins to contract by about 40 basis points (bps) on a quarterly basis due to raw material headwinds and higher shipment costs that were partly offset by price hikes during the quarter.
VE Commercial Vehicles (VECV), the heavy commercial vehicles joint venture with the Volvo Group, is projected to report EBITDA margin of 6 percent for the quarter against 6.7 percent in the previous quarter due to inflationary pressures and negative operating leverage.
“VECV margins impacted by raw material cost pressures and operating deleverage while for standalone, the operating leverage is expected to dilute the impact of higher raw material costs,” said a report from Motilal Oswal Financial Services.
Experts will be closely watching the management’s commentary for the outlook on volumes and margins.
The Eicher Motors share closed Rs 27.15 higher at Rs 3,116.75 on Monday, August 8, on the National Stock Exchange. The stock has generated returns of 13.5 percent during the year and has gained 6.3 percent over the past month.
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