iifl-logo-icon 1

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Eicher Motors: Entering a low EPS growth phase

28 Feb 2024 , 10:18 AM

Recommendation: Reduce

Target Price: ₹3,570

In Dec-Feb, it is down 2% YoY. Slowdown in RE has coincided with cooling-off of ‘>250cc’ category (relative to 2W industry), as well as market-share loss for RE in ‘>250cc’ category. Analysts at IIFL Securities expect RE’s growth to stay muted for at least two more quarters. In recent years, RE has offset volume loss of Classic 350 (40% below peak), with Meteor (FY21) and Hunter (FY23). However, RE may be running out of high-volume white spaces around the 350cc segment. Meanwhile, CV segment (15% of Consolidated EPS) is peaking out and may become a drag on EPS growth. Overall, IIFL expects EPS growth to decelerate to 7% CAGR over FY24-26. Analysts at IIFL Securities have downgraded the stock from Add to Reduce.

RE’s retails have grown only 3% YoY in the past six months

In the Q3FY24 call, management asserted that RE’s retails grew 13% YoY in the festive season (largely in line with 2W industry). However, as per Vahan, RE’s retail registrations are up only 3% YoY over the last six months (Sep’23- Feb’24). Over a similar period (Sep-Jan; Feb yet to be reported), RE’s domestic wholesales are up 4% YoY, largely in line with retails. This implies that sales were quite weak before and after the festive season.

Category slowing; RE losing share

Slowdown in RE’s growth has coincided with two factors. The ‘>250cc’ motorcycle category has cooled off relative to the overall 2W industry. The ‘>250cc’ category increased from 6.0-6.5% of the overall motorcycle industry over FY17-FY22, to ~9% in H2FY23. Since then, it has come off to ~8%, indicating a cool-off in premiumisation. Moreover, RE’s market-share in the ‘>250cc’ category has slipped from 93% in FY23 to 86% in recent months, triggered by the launch of Harley Davidson X440 by Hero and Triumph models by Bajaj.

RE running out of white spaces to expand the category?

With 93% market-share in the >250cc category (FY23), RE was almost a monopoly. Unlike other auto OEMs, RE could grow only by expanding the category and not winning share from the competition. Sales of Classic 350 (top selling model) are down 40% from FY18/FY19 peak and are plateauing at lows. RE tasted success with Meteor 350 (cruiser) and Hunter 350 (lower priced street bike). Unless RE launches new models with wide-appeal (not niche), differentiated from its existing portfolio, growth may stagnate.

Related Tags

  • Eicher Motors
  • Royal Enfield
sidebar mobile


Read More
Knowledge Centerplus

Logo IIFL Customer Care Number
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

Knowledge Centerplus

Follow us on


2024, IIFL Securities Ltd. All Rights Reserved

  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.


Get better recommendations & make better investments

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp