Eicher Motors Limited (EML) reported consolidated numbers for Q1FY19 were in-line with the consensus estimate. Consolidated revenue was up 27% yoy (1% qoq) at Rs2,548cr, meeting consensus estimate. EBITDA was up 30% yoy (2% qoq) at Rs810cr, while EBITDA margin expanded 75bps yoy to 31.8%. At the operating level, performance was aided by lower input costs and steady operating and manufacturing expenses. Consolidated PAT was Rs576cr, up 25% yoy and qoq.
Standalone performance highlights
Standalone performance for the quarter was in line with or slightly above consensus estimate. Standalone revenue at Rs2,545cr, up 27% yoy (1% qoq). Revenue growth was led by 22% yoy volume growth (flat qoq) and realization growth of 4% yoy (1% qoq).
The growth in realization was led by improvement in product mix rather than actual price hike. Contribution of higher capacity motorcycles (engine capacity greater than 350cc) moved up to 8% in Q1FY19 from 7% in Q1FY18.
A strict control on operating and manufacturing expenses and improved product mix led to 92bps yoy expansion (flat qoq) in EBITDA margin to 32.3%. RE reported EBITDA of Rs822cr, up 31% yoy (1% qoq).
Standalone adjusted PAT stood at Rs591cr, up 20% yoy (3% qoq). PAT surpassed consensus estimate of Rs583cr.
VECV performance highlights
VECV performance was better than expected in Q1FY19. Revenue at Rs2,609cr was up 45% yoy (down 21% qoq), higher than consensus estimate of Rs2,566cr. Revenue growth was led by 41% yoy volume growth and 3% yoy realization growth. Company took a blended price hike of 1.5% for VECV in Q1FY19.
EBITDA at Rs240cr was 61% yoy higher (24% qoq lower) and better than consensus estimate of Rs231cr. EBITDA margin expanded 93bps yoy (contraction of 30bps qoq) to 9.2%. VECV reported PAT of Rs118cr, up 76% yoy (33% qoq lower), significantly higher than consensus estimate of Rs95cr.
Conference Call Highlights
FY19E production guidance = 9,50,000, implying growth of 16% yoy.
Realization growth for Royal Enfield was mainly led by better product mix, company has not taken any price hike in Q1FY19.
VECV Revenue Rs2609cr, up 45% yoy, EBITDA margin = 9.2%
Dealer level inventory at RE is 10-12 days.
Not seeing any reaction from fleet operators w.r.t. axle load norms.
Took blended price hike of 1.5% in VECV
Staff cost has gone up significantly in line with headcount increase.
Going slow in international markets to ensure profitability-led expansion in overseas markets.
Same-store-sales growth in Q1FY19 was 10%. For SSS growth, company considers stores which have been functional for at least two years.
Percentage of sales from financing = 45% currently against 30% in pre-demonetization.
Given the high base in RE, growth rate for motorcycles can now be benchmarked against industry growth. In other words, growth rate could now be in tandem with sector growth, against stratospheric growth levels seen earlier.
Eicher Motors Ltd ended at Rs27,484.25, down 0.25 points, or 0%, from its previous close of Rs27,484.50 on the BSE.
The scrip opened at Rs27,790 and touched a high and low of Rs27,999 and Rs27,210.10, respectively. A total of 30,633 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.
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