Eicher faces a Himalayan challenge in H2; Hero MotoCorp, Bajaj Auto set to zip fast

Bajaj Auto’s strong market position, expansion of electric 2W and 3W networks, motorbike portfolio premiumisation and a steady recovery in exports are the main drivers for future growth.

Eicher Motors has long been synonymous with the premium motorcycle segment in India, maintaining a market share of about 90 percent. It has held an undisputed leadership position in the over 250cc sector for more than a decade. However, this dominance is currently facing a potential challenge as two established players seek to make inroads into the market.

The November sales figure is a case in point as the Royal Enfield maker recorded the slowest growth among the three leading domestic bike makers.

Here's what analysts are predicting for the second half of the financial year.

While Eicher is well-positioned to capitalise on the trend with its new launches, the recently introduced vehicles such as the Himalayan motorcycle, priced 25 percent higher, may not help the company regain the market share lost in the 250cc and above segment. Nomura Financial Advisory and Securities predicts Royal Enfield's market share will decline to 82 percent from 90 percent currently in the coming quarters.

"Given the competitive aggression, we believe that Royal Enfield would be forced to reconsider its pricing and brand strategy very quickly, which will in turn drive margin pressure," HDFC Securities analysts said.

Also read: Eicher stock advances 14% in a month. Can its ‘Himalayan’ rally continue?

Gaining close to 15 percent in the last month, it is estimated that the stock price could consolidate in the coming months. "Once these two companies start ramping up production, Eicher Motors' volumes could get impacted, " Himanshu Singh, an analyst at Prabhudas Lilladher, told Moneycontrol.

What's in it for Hero Motocorp?

The world's largest two-wheeler company is expected to sustain momentum in revenue growth on the back of robust demand supported by festival season, strong order book, new launches and an attractive product portfolio.

"We believe the management’s sustained efforts to launch new products and cost minimisation and healthy booking would continue to support earnings performance in the coming quarters," Geojit Financial Services said in its recent note on the company.

Read more: Hero MotoCorp to build 100 premium stores by June-end, says CEO Niranjan Gupta

On the back of the growing Indian economy, the company's management expects a gradual recovery in rural demand (specifically entry-level segment), new product launches in premium motorcycles and scooters, and a ramp-up of the EV product portfolio to help in double-digit revenue growth in FY25.

Where's Bajaj Auto heading?

Analysts suggest that Bajaj Auto should see a strong run in the domestic market — both in 2W and 3W — which will help it deliver robust revenues and profitability despite a slow recovery in exports. "On the domestic 2W side, strong growth in the 125cc+ segment is leading to a better product mix and margins," domestic brokerage firm KRChoksey said. "The company has gained market share in the segment and is likely to see further gains due to new launches under the Pulsar brand and the 250cc+ segments of Triumph and KTM, given that the election results have also been positive," said Unnati Jadhav, a lead analyst at KRChoksey in a conversation with Moneycontrol.

Read: Bajaj Auto riding on 3-wheelers for next leg of earnings growth

Bajaj Auto’s strong market position, expansion of electric 2W and 3W networks, motorbike portfolio premiumisation and a steady recovery in exports are the main drivers for future growth. "However, we believe that persistent geopolitical tensions and a rise in raw material prices present short-term challenges," analysts at Geojit said in a note.

Bajaj Auto sales surged 31 percent to about 4.03 lakh units in November 2023 as compared to the year-ago period. Hero Motocorp witnessed a jump of 25.6 percent to 4.91 lakh units last month, while Eicher saw sales rise 13 percent to 80,251 units over November 2022.

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