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Last Updated : Nov 08, 2019 11:00 AM IST | Source:

Eicher Motors, M&M share price gain 1-2% ahead of September quarter earnings

Hit by weak volumes, Mahindra and Mahindra is likely to report a double-digit decline in the September quarter.

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Shares of Eicher Motors gained more than a percent and those of Mahindra & Mahindra rose 2 percent in the morning trade on November 8 ahead of quarterly earnings reports due later in the day.

Eicher Motors is expected to see more than 10 percent fall YoY in the second quarter (July-September) profit and revenue due to the weak performance of both Royal Enfield and commercial vehicle segments.

"We expect consolidated adjusted net profit to decline by 13 percent YoY led by the weak performance of both Royal Enfield and VECV," said Kotak Institutional Equities, which sees revenue falling 10.7 percent YoY.


Royal Enfield volumes declined by 21 percent YoY to 1.67 lakh units in Q2FY20 due to weak demand and high ownership cost, while VECV's volume fell 39 percent YoY.

However, the net realisation is likely to improve by around 12 percent YoY due to ABS-related price increase and mix improvement.

At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) may fall around 25-30 percent YoY and there could be a steep margin contraction.

Utility vehicle and tractor-maker Mahindra and Mahindra is likely to report a double-digit decline in the September quarter.

Brokerage houses expect the profit to fall in the range of 12-40 percent year-on-year and revenue is likely to decline more than 11 percent compared to the year-ago period.

Overall volumes in Q2FY20 declined by 16 percent YoY led by 8 percent fall in tractor volumes and 21 percent drop in auto volumes.

"We expect revenues to decline by 11 percent YoY in Q2FY20," said Kotak Institutional Equities, which expects profit to fall 25 percent YoY.

Motilal Oswal, which expects profit to decline 12.4 percent, said e company's realisation is expected to improve 3.7 percent YoY (down 1 percent QoQ), as impact of price increase was partly offset by the product mix.

At operating level, Kotak expects EBITDA margin to decline by 120 bps YoY in Q2FY20 due to negative operating leverage.

Mahindra and Mahindra was quoting at Rs 589.60, up Rs 9.20, or 1.59 percent, and Eicher Motors was trading at Rs 21,680.45, up Rs 249.85, or 1.17 percent, on the BSE at 1029 hours.

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First Published on Nov 8, 2019 11:00 am
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