Eicher Motors Ltd's (EML) consolidated numbers in Q3FY19 were lower than the consensus expectations, especially on the EBITDA and PAT fronts. Consolidated revenue in the quarter was in-line with expectation at Rs2,341.06cr, up 3.2% yoy (down 3% qoq). EBITDA declined 3.9% yoy (7% qoq) to Rs679.50cr, missing the expectations of Rs711cr. EBITDA margin contracted 214bps yoy (126bps qoq) to 29%. This was the first time in multiple quarters that consolidated EBITDA margin stepped below the 30%-mark. A jump in other income (up 210% yoy, 57% qoq) pushed consolidated PAT to Rs532.92cr, which was 2.4% yoy higher (3% qoq lower). Consolidated PAT was below the expectations of Rs583cr.
Standalone revenue was up 4% yoy (down 2% qoq) to Rs2,346cr, slightly ahead of the estimates. Despite a volume decline of 6% yoy (7% qoq), revenue was boosted by a realization growth of 10% yoy (5% qoq). We had expected realization to exhibit healthy growth, given that the Royal Enfield’s recent launches have features like disc brakes and ABS system, which command higher prices. However, at Rs1.20 lakh per motorcycle, realization marginally surpassed the expectations of Rs1.18 lakh per motorcycle. Higher launch-related expenses led to a standalone EBITDA decline of 4% yoy (6% qoq) to Rs692cr, below the expectations of Rs717cr. EBITDA margin contracted 224bps yoy (113bps qoq) to 29.5%. Standalone PAT was 6% yoy higher (4% qoq higher) at Rs501cr.
VECV performance was better-than-expected at the top-line level. Revenue increased 9% yoy (declined 5% qoq) to Rs2,818cr, led by 4% yoy volume growth (9% qoq volume decline) and 4% yoy realization growth (5% qoq realization growth). However, EBITDA exhibited a huge underperformance, declining 18% yoy (30% qoq) to Rs186cr, 20% below the expectations. At 6.6%, the EBITDA margin contracted 213bps yoy (240bps qoq). The management cautioned that heavy discounting continues in the CV industry despite steady demand.
Eicher Motors Ltd ended at Rs20,674.70, down Rs1900.3, 8.42%, from its previous close of Rs. 22,575 on the BSE. The scrip opened at Rs20,400 and touched a high and low of Rs21,473.35 and Rs20,238.45, respectively. A total of 2,73,706 (NSE+BSE) shares were traded on the counter. The stock traded above its 200-DMA.
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