Eicher Motors Ltd, the maker of iconic Royal Enfield (RE) motorcycle, commercial vehicles and tractors, is coming out with its results on November 3 for the quarter ended September 21.
Experts expect its revenues to decline between 5 percent and 7 percent on a yearly basis and profits are expected to dip by 7-9 percent.
The company had reported net sales of Rs 2,134 crore and a PAT of Rs 343 crore in the second quarter of the previous financial year. In the previous quarter of this financial year, the net sales for the company stood at Rs 1,974 crore with a profit after tax of Rs 237 crore.
What expectations do brokerages have?
A report from Emkay Research expects volumes to fall 17 percent Year-Over-Year (YoY) with average realisations improving by 15 percent owing to price hikes and product mix in terms of a higher share of 350 CC+ motorcycles.
It expects net sales to decline 4.1 percent on an annualised basis to Rs 2,046 crore with EBITDA coming in at Rs 372 crore which is a decline of 21 percent from 2020’s EBITDA of Rs 471 crore. EBITDA margins are expected to contract 387 bps to 18.2 percent due to lower scale and delays in pass-through of commodity inflation.
On a quarterly basis, revenues are expected to improve 3.6 percent with EBITDA clocking a rise of 2.7 percent on a Quarter on quarter (QoQ) basis. EBITDA margins are expected to remain flat sequentially and while PAT is looking to improve by 28 percent from last quarter.
The brokerage expects a decline of 11.8 percent in net profit at Rs 303 crore. It says,"Share of profits from Volvo-Eicher Commercial Vehicles (VECV) JV may rise to Rs 26 crore from a loss of Rs 4 crore last year, owing to notably high volumes (85 percent).”
ICICI Securities (Isec) expects a soft performance from the company in this quarter on flattish QoQ volumes of RE at 1.23 lakh units in this quarter. Consolidated net sales are expected at Rs 1,967 crore declining 7 percent from last year and up 1.2 percent from the previous quarter. It expects the realisations for the company to improve about 4.5 percent q-o-q with blended realisations of Rs 1.59 lakh/unit due to higher share of >350 cc motorcycles within the overall mix.
An EBITDA of Rs 355 crore is expected for the quarter with EBITDA margin of 17.9 percent, declining 50 bps on a QoQ basis. The decline in margins is driven by higher commodity prices and absence of operating leverage.
The PAT is expected to come in at Rs 317 crore, down 8 percent on a yearly basis but up 34 percent on a quarterly basis. The brokerage says, “We expect VECV profit share at Rs 47.4 crore (VECV volumes up 160 percent QoQ to 15,134 units)”.
Kotak Institutional Equities expect net sales to come down 5.8 percent YoY to Rs 2,011. However, it is a growth of 1.8 percent over the previous quarter.
The brokerage says, “We expect Royal Enfield revenues to decline 7 percent YoY in this quarter led by 18 percent YoY decline in volumes, partly offset by 14 percent YoY increase in ASPs due to richer model mix and price increases taken over the past few quarters.”
EBITDA is expected to contract by 17.8 percent on a yearly basis to Rs 387 crore in this quarter with EBITDA margins squeezing by 283 bps to 19.3 percent and improving by 86 bps on a sequential basis.
The brokerage expects VECV to report an EBITDA margin of 6 percent in this quarter compared to 1.1 percent in the previous quarter of this year due to operating leverage benefits.
The stock closed at Rs 2,542.45 on November 2, down Rs 17.55 from its previous close. The stock is up 25 percent over the past year but flat in this financial year. The stock is down 2 percent over the past 3 months and down 8 percent over the past one year.
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