Eicher Motors skids up to 6%, recovers later ahead of March quarter results

Shares of Eicher Motors, the parent company of Royal Enfield, a manufacturer of middleweight motorcycles, slipped as much as 5.89 per cent to Rs 15,451 apiece on the BSE on Friday, ahead of its March quarter results due later in the day. 


The stock, however, recovered later and at 11:45 am, it was trading 1 per cent lower at 16,252.90 levels. In comparison, the benchmark S&P BSE Sensex was trading over 1 per cent lower at 33,113.63 levels. Eicher Motors had a hit a 52-week high of Rs 23,427.75 on November 26, 2019 while it declined to a 52-week low of Rs 12,460, on April 7 this year. 


For May, Eicher Motors reported a 69 per cent year-on-year (YoY) drop in Royal Enfield sales at 19,113 units. Royal Enfield's exports slumped 68 per cent to 684 units in May 2020 as against 2,160 units in May 2019. The company had sold 91 Royal Enfield motorcycles in April 2020 amid the nationwide lockdown. READ MORE


What brokerages expect from Q4 results


Analysts at Kotak Securities note that Royal Enfield volumes declined by 17 per cent YoY to 163,000 units in 4QFY20 due to weak demand and the lockdown; however, it expects the company's standalone revenues (sales) to decline by 14 per cent YoY to Rs 2,153.2 crore, led by 3 per cnt YoY increase in average selling prices (ASPs) due to price increases led by the introduction of BS-VI in a few of its models. The brokerage expects earnings before interest, taxes, depreciation, and amortisation (EBITDA) to decline by 27 per cent YoY for Royal Enfield, largely driven by negative operating leverage in 4QFY20.


The company's EBITDA is estimated to fall 26 per cent YoY to Rs 508.2 crore while EBITDA margin is seen at 23.6 per cent, down 379 bps YoY. PAT or profit after tax is seen at Rs 411.3 crore, down 24.5 per cent YoY and 17.5 per cent QoQ, led by weak performance of both Royal Enfield (-17 per cent YoY) and Volvo Eicher Commercial Vehicles (-87 per cent YoY).


Edelweiss Securities expects Eicher Motors' revenues to decline by 12.6 per cent YoY to Rs 2,183.8 crore. "Royal Enfield (RE) realisations are expected to improve as share of BSVI motorcycles increases. Margins at 23.7 per cent is expected to decline nearly 370bps YoY," it said. 


EBITDA is seen at Rs 517.8 crore, down 24.4 per cent YoY while core PAT is expected to slide 26.1 per cent YoY at Rs 402.7 crore.