 "Eicher Motors rallies 5% in 3 days on healthy outlook; outperforms market")
Shares of Eicher Motors, listed parent of Royal Enfield and the global leader in middleweight motorcycles, are trading higher for the third straight day, gaining 2 per cent to Rs 5,221.30 on the BSE in Friday’s intra-day trade on healthy growth prospects. In three days, the stock of the two-wheeler company has rallied 5 per cent. The stock had hit a record high of Rs 5,386.55 on January 3, 2025.
In one month, Eicher Motors has outperformed the market and its peers by surging nearly 9 per cent, as compared to 1.4 per cent decline in the BSE Auto index. Bajaj Auto, Hero MotoCorp and TVS Motor Company were down in the range of 4 per cent to 6 per cent during the period.
Eicher Motors is the market leader in the >250 cc premium motorcycle segment (market share ~90 per cent) through its aspirational models under the Royal Enfield (RE) brand, such as Bullet, Classic, Himalayan, Interceptor, etc.
In December 2024, Eicher Motors had reported a 25 per cent year-on-year (YoY) jump in its total motorcycle sales at 79,466 units. The company's international business recorded 90 per cent growth, with 17,575 units sold during the month.
The company’s management said the company has launched some category-defining motorcycles through the year and it is encouraging to see the response to its recently launched motorcycles both in India and international markets. ALSO READ: Hindustan Zinc shares rally 13% in two weeks; will the rally continue?
“As we gear up for 2025, we are looking forward to sustaining our growth momentum and continue inspiring our riding community across the globe with Pure Motorcycling initiatives across the board,” the management added.
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The management continues to focus on growth with a rise in absolute profitability. Further, retail sales in overseas markets have started improving. Management has highlighted that commodity price points are no more a pressure point and, hence, the increase in volumes along with improvement in product mix would drive its profitability levels. The company expects commercial vehicle volumes to pick up in the second half of the fiscal year and anticipates margins to improve as operating leverage benefits start to materialise.
Meanwhile, Royal Enfield maintains a commanding position in the >250 cc segment domestically supported by frequent new launches including recent models like Guerilla 450, Bear 650 and Classic 650. Additionally, it has recently introduced a new electric vehicle brand, Flying Flea with showcased models due for launch in early 2026.
With 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 ~1 million units versus its export sales volume of ~80,000 units in FY24. With upcoming new launches in the pipeline, coupled with tangible steps being taken in the Electric Vehicle (EV) space, there exists healthy growth longevity for the Royal Enfield franchise at Eicher Motors going forward, according to analysts at ICICI Securities.
“With healthy growth prospects on the anvil amidst slew of exciting product launches and marketing activity, we continue to assign ‘Buy’ rating on the stock with a target price of Rs 5,730 per share. Eicher Motors has a capital efficient business model with a cash positive balance sheet,” the brokerage firm said in a company update. ALSO READ: JSW Energy share up 2% as board to consider fund raising on January 28
Eicher is well-placed to recover strongly and put performance in top gear, driven by an increase in the addressable market’s size and improvement in operational performance in the company’s 2W division. Further, the company’s CV business is geared up to majorly improve its contribution to consolidated profit before tax (PBT), led by expected market share gains, rising synergies with the JV partner (Volvo Group), and operating leverage benefits, the brokerage firm Mirae Asset Sharekhan said in Q2 result update.