Eicher Motors, the parent company of Royal Enfield motorcycles, has posted a 50 per cent rise in net profit, its highest ever, for the first quarter (Q1) of the current financial year, amounting to Rs 918 crore, compared with Rs 611 crore during the same period in 2022-23 (FY23), owing to a rise in sales and revenue.
The company also saw a record rise in revenue from operations at Rs 3,986.4 crore during the April-June quarter of 2023-24 (FY24), up 17 per cent from Rs 3,397.5 crore in Q1FY23. The company’s earnings before interest, tax, depreciation, and amortisation was Rs 1,021 crore, up 22.8 per cent compared with Rs 831 crore in the same quarter of the previous financial year.
Royal Enfield sold 225,368 motorcycles in the quarter, an increase of 21.1 per cent from 186,032 motorcycles sold during the same period in FY23. The company said on Thursday that it has lined up a capital expenditure of Rs 1,000 crore for Royal Enfield during the current financial year (FY24), up 54 per cent from Rs 650 crore in FY23.
Volvo Eicher Commercial Vehicles is also looking at a capital expenditure of around Rs 600-700 crore during the current financial year, up from around Rs 500 crore in the last financial year. The additional investment is mainly going to come from the electric vehicle (EV) segment. The company is looking at an initial capacity of 150,000 EVs.
“On the EV front, we have made enormous progress internally. We have a strong and capable team on the engineering side and the commercial side now,” said Siddhartha Lal, managing director of Eicher Motors.
Competition to increase market size
Lal said that the company is expecting fresh competition from the US bike maker Harley-Davidson and British rival Triumph to increase the size of the midsize motorcycle market from 1 million now to 1.5-2 million in the next five/six years. Both these players have tied up with Hero MotoCorp and Bajaj Auto to launch their products in the Indian market.
“Most of them are not able to do things themselves. So they thought, let us join forces and contract manufacture. We are no strangers to competition,” Lal said.
At present, Royal Enfield owns more than 90 per cent market share in the 250-750cc segment.
“We are many steps ahead of our competitors. We believe that more competition should help to move the market. Even if you have 85-87 per cent of a 1.5-2 million market, we are okay with that. The little bit we leave out for the competition to come and pick if they can. The segment has got some action and competition,” he added.
Lal said that the company is credited with building the segment from almost 50,000 units 10 years ago to 1 million units now.
“I don’t care about competition if they are not selling any bikes and I am better than them. The resale price of the Classic 350 is tremendous,” he added.
“At Royal Enfield, we continue on our robust growth momentum and have registered our highest-ever Q1 sales, beating our previous high of Q1 of 2018-19. A big highlight for us during the quarter was the spectacular performance of the Hunter 350 as the motorcycle recently crossed the 200,000 global sales mark in just 11 months since launch,” said B Govindarajan, chief executive officer, Royal Enfield and whole-time director, Eicher Motors.