BS-VI transition, production cuts, slowdown hurt Feb auto sales: Experts

Eicher Motors, the parent company of Royal Enfield, climbed around 4 per cent to Rs 17,685 apiece on the BSE on Tuesday, a day after the company announced its board of directors will meet on March 11 to consider and approve payment of interim dividend. 


"A meeting of the Board of Directors of the Company will be held on Wednesday, March 11, 2020, inter-alia, to consider and approve proposal for payment of interim dividend on the equity shares of the Company for the financial year 2019-20," the company said in its press release. 

At 10:03 am, the stock was trading 3.6 per cent higher at Rs 17,621 while the benchmark S&P BSE Sensex was trading over 1 per cent higher at 38,613 levels. 


Earlier, the company unveiled its sales figures for February. On year-on-year (YoY) basis, sales of motorcycles of models with engine capacity upto 350cc remained flat at 57,292 units, whereas models with engine capacity exceeding 350cc grew 11 per cent YoY to 6,244 units. Overall, sales figures grew 1 per cent YoY to 63,536 units in February. However, exports, slipped 8 per cent to 2,348 units. 


On year-to-date (YoY) basis, the company reported 17 per cent decline in its motorcycle sales of models with engine capacity upto 350cc while models with engine capacity exceeding 350cc saw a 34 per cent uptick at 70,499 units. In total, sales declined 14 per cent YoY to 660,024 units. Exports, on the other hand, jumped 95 per cent.


As regards coronavirus, Eicher Motors said that the virus outbreak had minimal impact on the production of motorcycles during February. "Some of the company’s supply partners have dependencies on the manufacturers in China for sourcing of certain specific components. The company is making all efforts for maintaining continued supplies of these components," it said. 


On BS VI transition, the company informed that it has already moved a large part of its product portfolio to BS VI and is seeing a good response to the BS VI motorcycles. The production of BS VI motorcycles is ramping up as BS VI supply chain is gradually stabilizing.


For December quarter (Q3FY20), Eicher Motors reported a 6.42 per cent decline in its consolidated net profit to Rs 498.70 crore. It had posted a net profit of Rs 532.95 crore for the corresponding period of the previous fiscal. 


Consolidated total revenue from operations of the company stood at Rs 2,371.01 crore for the quarter under consideration as against Rs 2,341.06 crore for the same period of the previous year. Royal Enfield sold 189,143 motorcycles in the quarter, a decline of 2 per cent from 193,164 motorcycles sold over the same period in the last financial year, the company had said.


In the past one year, shares of Eicher Motors have underperformed the market by falling around 15 per cent against about 2.5 per cent rise in the benchmark Nifty50 index. Nifty Auto index has tumbled 18.5 per cent during the same period, ACE Equity data shows.