Eicher Motors Q1 earnings previw: Profit likely to tank 70-75% on drop in sales

NEW DELHI: Shares of Eicher Motors fell nearly 1 per cent in Thursday's trade ahead of the company's June quarter results scheduled for later in the day. The maker of Royal Enfield is expected to report a 70-75 per cent fall in consolidated net profit on a 65-67 per cent drop in sales.

HDFC Securities said investors would eye demand outlook in the semi-urban areas, where new format stores have opened up. They would keenly follow updates on the outlook for the 650cc Twins – both in local as well as overseas markets, as well as the impact of the lockdown on urban centres.

The stock fell 0.87 per cent to hit a low of Rs 21,911.30 on BSE.

For the quarter, Eicher volumes were down 69 per cent.

Edelweiss expects the auto maker's core profit to plunge 73 per cent to Rs 121.80 crore from Rs 451.80 crore in the year-ago quarter. It sees revenue falling 67 per cent to Rs 787.10 crore from Rs 2,381.90 crore in the year-ago quarter.

"We expect consolidated revenue to decline by 67 per cent YoY. Royal Enfield realisations are expected to remain resilient due to price hikes taken by the company for BSVI cost pass through," Edelweiss said.

HDFC Securities expects profit to fall 74 per cent to Rs 120 crore while it sees sales dropping 67 per cent to Rs 780 crore. Ebitda margin, it says, may plunge 700 basis points YoY to 18.8 per cent.

Emkay Global, meanwhile, expects Eicher Motors to report a consolidated loss of Rs 13.11 crore. It said that revenues decline will be lower than the 69 per cent volume fall due to an increase in realisations and higher share of spares.

"Realisations are expected to increase due to a benign mix, higher share of 650cc twins and price hikes due to BS6 and safety norms. Twins' share in sales is at 8 per cent against 6 per cent earlier. Gross margin is expected to improve due to lower input cost. Meanwhile, Ebitda margins are expected to contract due to a lower scale. The share of loss from associates (VECV) is expected at Rs 190 crore on account of lower volumes," it said.