Eicher Motors Ltd., as anticipated, saw the impact of chip shortage on its September quarter earnings performance. But, Royal Enfield’s better realization and lower staffing expenses helped the company to report a strong performance.
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’s realizations, helping it to report its best performance in the international markets for the second consecutive quarter with total exports of 17,922 units, the company said 132 per cent year-on-year. has increased. Notably, exports were up about 41% from the same period in Q2 FY20.
Royal Enfield’s receipts grew 25% year-on-year and 15% sequentially ₹176,700 as per analysts’ calculations. These exceeded analyst estimates. Analysts at Motilal Oswal Financial Services had forecast receipts: ₹153,500 crore in 2Q FY22.
Improved realizations also partially offset the impact of lower volumes after semiconductor reductions on financial performance in the second quarter.
Company reported total revenue ₹2,250 crore, up 5.4%. From ₹2,134 crore in the same quarter of FY 2011. Ebitda at ₹was equal to 470 crores ₹471 crore in the year-ago period. Ebitda means earnings before interest tax, depreciation and amortization.
net profit was ₹373 crore, from above ₹343 crore in the same period last year.
The company is also doing well in the commercial vehicle segment, with sales picking up on the back of a pick-up in economic activity. VE Commercial Vehicles Ltd., a joint venture between the Volvo Group and Eicher Motors, reported an improvement in volumes, with Q2 sales nearly doubling to 15,134 units.
The outlook for Eicher Motors is improving as well, with improved growth momentum in the commercial vehicles segment, expected improvement in Royal Enfield sales and narrowing of the semi-conductor shortfall. There is a spurt in sales during the festive season. The consumer sentiment has improved and the second half is likely to be better than the first half. As semiconductor and supply chain issues are expected to ease into the next quarter, management is optimistic about the growth.
Analysts also have a positive outlook. People at Motilal Oswal Financial Services Limited (MoFSL) said, “Despite near-term uncertainties due to supply chain issues, the recently launched Classic 350 and upcoming products are expected to expand the addressable markets and provide growth for RE. Will help drive the next phase.”
Shares of Eicher Motors have gained over 7% this week.
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