Eicher Motors hits new high on healthy outlook; stock surges 11% in 5 days

The company's flagship brand - Royal Enfield volumes increased by 24 per cent on a YoY basis in Q4FY25 led by strong demand trends in domestic and export markets.

The stock of two-wheel and commercial vehicle major Eicher Motors hit its lifetime high of ₹5,715 on Thursday’s trading session on a healthy business outlook. The counter, which has rallied about 8.5 per cent in the past five trading sessions, closed at ₹5,678, up 1.1 per cent, on Thursday.

 

The outperformance of the premium motorcycle market leader is stark vis-a-vis its peer groups as well as the benchmark. Over the last six months, the stock has delivered gains of 19 per cent while the Nifty Auto is down 15 per cent, a 34 percentage point gap. Similarly, it has outshone the Nifty 50 by a 23 percentage point gap over this period. The outperformance gap varies between 10 per cent and 30 per cent over other time periods, ranging from a month to a year.

 

For the financial year 2024-25 (FY25), Eicher Motors’ Royal Enfield (two-wheeler segment) reported healthy volumes, selling 1 million units and registering a growth of 10.6 per cent year-on-year (Y-o-Y). Within this, >350cc segment reported about 40 per cent Y-o-Y growth at 141,000 units. For the month of March 2025, total volumes were up by 33.7 per cent Y-o-Y at 101,000 units, with >350cc segment reporting a growth of 49 per cent Y-o-Y. 

 

Royal Enfield maintains a commanding position in the >250cc segment of the domestic market supported by frequent new launches, including recent models like Goan Classic 350 and Scram 440. Additionally, it has recently introduced a new electric vehicle (EV) brand, Flying Flea, with showcased models due for launch in in the first quarter of 2025-26 (Q1FY26).

 

Analysts at Kotak Institutional Equities expect Eicher Motors’ (consolidated business) operating profit to improve 14 per cent Y-o-Y on a 24 per cent Y-o-Y volume growth in Q4FY25. This will be partly offset by higher marketing and advertising spends, inferior product (higher share of Bullet 350), and geographical mix.

 

“Royal Enfield volumes increased by 24 per cent on a Y-o-Y basis in Q4FY25 led by strong demand trends in domestic and export markets. As a result, we expect standalone revenues to increase by 23 per cent Y-o-Y in Q4FY25 led by 24 per cent Y-o-Y volume uptick and 1 per cent Y-o-Y decline in average selling prices due to inferior product and geography mix,” the brokerage firm said in quarterly earnings preview.

 

Analysts estimate standalone operating profit margin to increase by 60 basis points (bps) quarter-on-quarter (Q-o-Q) in Q4FY25 led by operating leverage benefits, higher mix of exports, and lower launch cost. The gains are partly offset by higher marketing spends and inferior mix in the domestic market.

 

With a focus on export markets amid increasing assembly plant operations, Royal Enfield is expected to gain meaningfully in this space, with addressable export market size estimated at about 1 million units versus its export sales volume of 80,000 units in FY24. With upcoming new launches in the pipeline and tangible steps being taken in the EV space, there exists healthy growth longevity for Royal Enfield franchise, ICICI Securities said in the company update.

 

The brokerage firm believes market reaction to Eicher Motors’ focus on growth over margins is overdone as it will in sum total lead to overall healthy growth in profit after tax (PAT). With tailwind expected from recent relaxation in the personal income tax regime, analysts said they continue to assign a “buy” rating on the stock and value Eicher Motors at ₹6,000 a share.

 

Eicher Motors is the market leader in the >250cc premium motorcycle segment (market share around 90 per cent) through its aspirational models under the Royal Enfield brand, such as Bullet, Classic, Himalayan, Interceptor, among others. The company, via its joint venture (JV) with Volvo called VECV (Eicher Motors has 54.4 per cent stake), also has a sizeable presence in the commercial vehicle (CV) space (8.2 per cent FY24 market share).