Royal Enfield Plumps Eicher Earnings In Q1; Profit Up By 59%

Its motorcycle unit Royal Enfield has boosted earnings at Eicher Motors for the first quarter of the current fiscal. Consolidated net profit in Q1 stood at Rs. 376.3 crore, which is a generous jump of 58.7 per cent from the same quarter a year ago. The numbers have beaten all analyst and street expectations. But here is the real kicker - of that profit a solid Rs.337.1 crore (or 89.5 per cent!) came from the motorcycle business. Royal Enfield in fact has seen its own profits jump nearly 70 per cent as compared to a 38 per cent increase in Q1 last year. Eicher clocked total income at Rs 1,555.69 crore for the April-June quarter, compared to Rs 1,095.89 crore in Q1'16.

So where has this massive growth come from? Royal Enfield is riding a wave and enjoying much success from its recently launched Himalayan seeing a demand of 1000+ motorcycles a month. "Our immediate business outlook remains strong and Royal Enfield continues to grow consistently, competitively and profitably towards leading and expanding the mid-sized motorcycle segment globally," said Siddhartha Lal, MD & CEO, Eicher Motors.

The Himalayan is not the only success at Royal Enfield with models like the Continental GT and Classic continuing to see good demand from domestic and export markets. Royal Enfield had opened a new plant in Chennai in 2012, and has just expanded capacity there by opening a second line. This takes total capacity at Royal Enfield up by 225,000 units to 675,000 units annually - no doubt a veritable leap for the niche motorcycle maker.

In what has also surprised the analyst community, even the CV business at Eicher has shown some positive growth. Volvo Eicher Commercial Vehicles (VECV) has in fact seen a healthy operating margin of 9.1 per cent which adds much cheer to the VECV forecast too. Commenting on the performance of the CV business, Siddhartha Lal said, "VECV continues to do well in the sub 5-ton category with the introduction of Pro 1049 where it is currently selling more than 100 trucks every month since its launch in the last quarter." VECV hopes for a revival in the medium trucks segment too, though it did see very strong growth in overall CV sales which were up 32.5 per cent compared to a year ago.