Eicher Motors Q2 preview: Profit, revenue may fall over 10% with steep margin contraction

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26 Aug, 2025 12:21

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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.

The stock has fallen more than 7 percent during the quarter as well as year-to-date but rallied 36 percent since September 20 when the government announced a cut in the corporate tax rate.

"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.

Kotak expects standalone (Royal Enfield) revenues to decline by 11 percent YoY led by 21 percent YoY decline in volumes, offset by 12 percent YoY increase in ASPs due to price increase led by the introduction of ABS in all the models.

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

"We expect EBITDA margin of Royal Enfield to decline by 570 bps YoY due to negative operating leverage (down 230 bps YoY) and decline in gross margin (down 340 bps YoY)," said Kotak which sees EBITDA falling 26.7 percent YoY.