05 Nov , 2021 By : Kanchan Joshi
Eicher Motors Ltd, as anticipated, did see the impact of chip shortages on its September quarter earnings performance. But, improved realisations of Royal Enfield and lower staff expenses helped the company report a strong show.
Royal Enfield sales stood at 123,515 units during the quarter, a decline of 17.2% year-on-year.
However, price hikes and higher exports pushed up Royal Enfield realisations, helping it report its best ever performance in international markets for the second successive quarter with total exports of 17,922 units, up a massive 132% on year, said the company. Notably, exports were up almost 41% from the corresponding period in Q2 FY20.
Royal Enfield realisations grew 25% on year and 15% sequentially to Rs176,700 as per analysts’ calculations. These were higher than analyst estimates. Analysts at Motilal Oswal Financial Services had estimated realisations at Rs153,500 crore in 2Q FY22.
Better realisations also partly offset the impact of lower volumes following semiconductor shortages on financial performance in Q2.
The company reported total revenues at Rs2,250 crores, up 5.4% from Rs2,134 crores in the corresponding quarter of FY21. Ebitda at Rs470 crore was comparable to Rs471 crore in the year-ago period. Ebitda stands for earnings before interest tax depreciation and amortisation.
Net profit was at Rs373 crore, up from Rs343 crore profit reported in the same period last year.
The company continues to do well in the commercial vehicles segment too, with sales rising following a pick-up in economic activities. VE Commercial Vehicles Ltd, a joint venture between the Volvo Group and Eicher Motors, reported improvement in volumes, with Q2 sales nearly doubling to 15,134 units.
With improved growth momentum in the commercial vehicles segment, expected improvement in Royal Enfield sales and easing of semi-conductor shortages, outlook for Eicher Motors is improving too. Sales have been getting a boost amid the ongoing festival season. Consumer sentiment has improved and the second half will likely be better than the first half. As semiconductor and supply chain issues are expected to ease off over the next quarter, management is optimistic about growth.
Analysts, too, have a positive outlook. Those at Motilal Oswal Financial Services Ltd (MOFSL) said, “Near term uncertainties due to supply chain issues notwithstanding, the recently launched Classic 350 and upcoming products would help expand addressable markets and drive the next phase of growth for RE."
Shares of Eicher Motors have risen more than 7% this week.
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