Eicher Motors rallies 5%, hits fresh 52-week high post Q2 results

Shares of Eicher Motors hit a fresh 52-week high of Rs 2,465, up 5 per cent on the BSE in the early morning trade on Friday in an otherwise subdued market on strong management commentary. In the past week, the stock has rallied 15 per cent, against a 3 per cent rise in the S&P BSE Sensex.

The management said production levels are at 70,000 units/month now, while bookings number were encouraging at 1.25 lakh units, including 8,000 units for newly-launched Meteor. The company has a robust order book and booking numbers are ahead of pre-covid levels, it said.

Meanwhile, for the July-September quarter (Q2FY21), Eicher Motors’ total revenue from operations declined 3 per cent year-on-year (YoY) at Rs 2,134 crore as compared to Rs 2,192 crore in the corresponding quarter of the previous fiscal, due to a drop in volumes. Royal Enfield sold 149,120 motorcycles in the quarter, a decline of 9 per cent from 163,390 motorcycles sold over the same period in Q2FY20. The company’s profit after tax was down 40 per cent to Rs 343 crore from Rs 573 crore.

For Q2FY21, due to a decline in volumes, VE Commercial Vehicles (VECV’s), a Volvo Group and Eicher Motors joint venture, revenue from operations dropped by 13 per cent to Rs 1,703 crore against Rs 1,955 crore in Q2 of last year. In spite of drop in revenues, the EBITDA margin improved to 6.9 per cent for the quarter against 5.4 per cent during the corresponding quarter for the last year due to stringent cost reduction measures being undertaken. The company incurred a marginal loss of Rs 7 crore during this quarter against a profit of Rs 15 crore in Q2 last year.

However, analysts at CLSA believes Eicher’s volume growth is unlikely to outperform peers in the near term, as 85 per cent of its demand is driven by upgrades. During the last 10 quarters of low growth and regulatory challenges (insurance, safety, BS6), Eicher’s volume growth and profitability have underperformed peers despite the company being in the premium category.

At 10:12 am, Eicher Motors was up 4 per cent at Rs 2,453 on the BSE, against a 0.39 per cent decline in the S&P BSE Sensex. The trading volumes on the counter nearly doubled with a combined 2.2 million shares changing hands on the NSE and BSE.