Eicher Motors skids 6% following weak December sales

  Royal enfield Royal Enfield Interceptor 650 and Continental GT 650



Eicher Motors has dipped 6 per cent to Rs 21,792 on the BSE after Royal Enfield (RE), the motorcycle franchise owned by the company, reported a 13 per cent year-on-year (Y-o-Y) decline in total sales at 58,278 units in December 2018. It had sold 66,968 motorcycles during the same month last year. On a month-on-month basis, the volume declined by 11 per cent. It sold 65,744 motorcycles in November 2018.

Sales of RE’s 350cc motorcycles, including the Classic 350, fell 15 per cent to 53,790 units. Sales of models with engine capacity up to 500cc, including the Himalayan and Classic 500 bikes, rose 21 per cent to 4,488 units.

The company’s total motorcycle sales during December quarter declined 5.9 per cent at 194,473 units, as compared to 206,585 units sold in the previous year quarter. Over the last 6 months, RE’s sales have been flat Y-o-Y (vs. 22 per cent growth in Q1FY19, 23 per cent in FY18).

“Despite production issues over the last few months, the waiting period for RE’s major models has declined consistently with dealership inventory now at 3- 4 weeks across regions. This clearly indicates that retail sales have been even weaker than reported wholesale dispatches over the past few months,” analysts at SBICAP Securities said in company update.

“After a robust 46% volume CAGR in FY13-FY18, we see continued de-rating in view of RE’s growing ‘brand fatigue’. Moreover, the strong response to the re-launch of Jawa brand will increase competition for RE,” the brokerage firm said with ‘sell’ rating on the stock with target price of Rs 19,500.

At 10:10 am; Eicher Motors was trading 5.5% lower at Rs 21,900 on the BSE, as compared to a 0.36% decline in the S&P BSE Sensex. A combined 121,538 equity shares changed hands on the counter on the BSE and NSE so far.

In the calendar year 2018, the stock had underperformed the market by falling 24% against 6% rise in the benchmark index.