Eicher Motors Q4 preview: Improved sales, pricing to help rev up Royal Enfield maker's earnings

The Eicher Motors share price has rallied nearly 20 percent in the last three months.

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Eicher Motors Ltd is expected to report a robust set of Q4 results, riding on increase in sales volumes, higher average selling price (ASP), new launches and benign commodity costs.

The Royal Enfield maker is expected to see its fiscal fourth-quarter net profit rise to Rs 1,013 crore, up 12 percent from the year-ago period, according to a Moneycontrol poll of eight brokerage estimates. Revenue from operations is expected to jump 9 percent on-year to Rs 4,166 crore.

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"Total Royal Enfield revenue expected to increase by 8.4 percent YoY in Q4FY24, led by 4 percent increase in volumes and increase in ASPs due to price increases taken in the last one year," Axis Securities said in a note.

Eicher Motors' EBITDA for January-March quarter is expected to expand 20 percent on-year to Rs 1,132 crore. EBITDA is earnings before interest, tax, depreciation and amortisation. The impressive EBITDA growth would be led by improved product mix and stable raw material prices, analysts at Prabhudas Lilladher said.

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As for sales volumes, Eicher Motors sold 2.28 lakh units during the quarter, up 4.2 percent on-year. During the same period last year, the automobile major sold 2.19 lakh units, data showed.

BNP Paribas, in a recent note on the automobile sector, said that with its growth strategy, Royal Enfield is evolving into a company with a varied product range and customer base, similar to Triumph, while also fostering a brand-centric culture.

However, both Triumph and Harley Davidson have opted to enter RE's market with aggressive pricing, challenging RE's longstanding dominance in the premium motorcycle segment. There are concerns that RE's selling, general, and administrative (SG&A) expenses may increase to counter this competition, potentially impacting its margins.

Eicher Motors shares closed at Rs 4,569, down almost a percent from the previous close on the NSE. The share price has rallied nearly 20 percent in the last three months.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.