01 Aug , 2025 By : Debdeep Gupta
Shares of Eicher Motors rallied as much as 4 percent to Rs 5,670 in morning trade on August 1 after the company reported a 9 percent rise in consolidated net profit at Rs 1,205 crore for the quarter ended June 30, 2025. Eicher witnessed a 15 percent increase in revenue at Rs 5,042 crore in Q1 FY26.
The gains come despite Morgan Stanley maintaining its Underweight rating with a target price of Rs 4,079. This implies a downside potential of 25 percent from the last close on the NSE. The management continues to focus on driving volumes over margins. However, the brokerage sees downside risks to consensus margin estimates, adding that the stock appears to be pricing in both high growth and high margins.
While earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 3 percent at Rs 1,203 crore in Q1 FY26 from Rs 1,165 crore in the same quarter of the previous fiscal, the operating margin declined by 266 basis points to 23.86 percent in the June quarter from 26.52 percent in the year-ago period.
Speaking during the Q1 FY26 post-earnings call, the company’s management said it remains "cautiously optimistic" about overseas markets and is laying the groundwork for sustained expansion. Brazil, in particular, has emerged as a high-potential market for Royal Enfield, with its large two-wheeler customer base and improving macroeconomic environment.
"We see huge potential in Brazil. It’s a good two-wheeler market, and we’re putting the CKD (completely knocked down) infrastructure in place with two assembly partners already onboard,” the company said. Eicher is also working on localised financing options in the region to improve customer access. "We’re tying up with banks to ensure seamless financing, and our retail footprint is expanding steadily."
Beyond Brazil, Eicher reported mixed trends across international markets. The UK remains muted due to an overhang of pre-registered inventory, but mainland Europe is seeing improving momentum. “We’ve taken distribution into our own hands in Europe and are now fixing the operational back end, including floor funding,” the management said.
Eicher Motors shares have risen 16 percent since the beginning of the year.
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