Eicher Motors’ Q3 profit up 34% YoY on robust margins, profit from VECV

Eicher Motors Ltd today posted 34 percent on-year growth in its consolidated net profit for the October-December quarter as the automaker’s margins improved on the back of higher volumes and moderation in commodity cost inflation. The earnings were also boosted by a strong growth in the share of profit from the VE Commercial Vehicle joint venture.

The New Delhi-based automaker’s consolidated net profit for the quarter came in at Rs 995.97 crore, against Rs 740.84 crore in the year-ago period. Revenue from operations rose 12 percent on year to Rs 4,178.84 crore, driven by higher Royal Enfield volume and price.

The company sold a total of 2.29 lakh Royal Enfield motorcycles during the three months, up 4 percent from the same quarter previous year. The company launched all-new Himalayan and the Shotgun 650 during the quarter while it introduced new features and colourways on the Meteor 350 cruiser.

“It has been a great quarter at Royal Enfield as we’ve continued on our strong growth momentum and have registered our highest ever sales for the quarter,” Royal Enfield Chief Executive Officer and Eicher Motor’s Whole-time Director B Govindarajan said. 

On the profitability front, Eicher Motors saw its earnings before interest tax and depreciation (EBITDA) grow 27% on year to Rs 1,090.27 crore. Operating profit margin, or EBITDA margin, expanded to 26.09% from 23.94% in the year-ago period, as per our calculation.

The robust operating performance can be attributed to relatively slower growth in operating expenses, while revenue from operations grew in double digits. The company’s total expenses during the quarter increased 8% on year to Rs 3,248.54 crore, led by the cost of raw materials and components consumed. 

Growth in operating profit reflects moderation in raw material cost inflation. The cost of raw materials and components consumed as a percentage of revenue from operations declined to 77.7% from 80.8% in the year-ago period.

Meanwhile, the share of profit from VE Commercial Vehicles joint venture jumped 78% on year to Rs 113.85 crore. VE Commercial Vehicles is a joint venture set up by Eicher Motors and Volvo Group for Eicher branded trucks and buses, Volvo buses and exclusive distribution of Volvo trucks in India, engine manufacturing and exports for Volvo Group, Eicher Power Solutions and Eicher Engineering Components.

“VECV delivered a strong performance in the quarter, with market share gains across business segments. We recorded our highest ever Q3 sales at 20,706 units,” said VE Commercial Vehicles Managing Director and Chief Executive Officer Vinod Aggarwal said.

During the quarter, VE Commercial Vehicles started deliveries of India’s first electric 5.5 T truck while it continues to deliver electric buses. The company has also introduced its first electric small commercial vehicle at the Bharat Mobility Global Expo 2024. The product is expected to be in the market from 2025.

For the first nine months of financial year, Eicher Motors reported a consolidated net profit of Rs 2,930 crore, up from Rs 2.008.36 crore. Revenue from operations increased to Rs 12,279.74 crore from Rs 10,637.86 crore.