Eicher Motors Q4FY18E result expectation

Expectations for Q4FY18E (Consolidated)*:

• Revenue: Rs2,509cr; up 33% yoy; expect growth to be strong led by 27% yoy and 33% yoy volume growth for Royal Enfield and VECV respectively; Realization gain for RE to be in the 3-5% range due to price hikes taken by the company
• EBITDA: Rs800cr; up 37% yoy; healthy product mix in RE as proportion of higher capacity motorcycles to the total volume mix has been steadily upwards
• EBITDA margin: 31.9%; expansion of 34bps yoy
• PAT: Rs630cr; up 37% yoy; we expect Rs289.50cr write-off of investment in JV entity Eicher Polaris Private Limited during the quarter

*Numbers based on consensus estimates

Q3FY18 performance highlights (Consolidated):

• Revenue: Rs2,269cr; up 24% yoy; led by 19% yoy volume growth and 4% yoy realization growth in Royal Enfield and 38% yoy volume growth (realization flat) in VECV
• EBITDA: Rs707cr; up 23% yoy
• EBITDA margin: 31.2%; contraction of 28bps yoy; higher operating and marketing expenses incurred for launch of its new models
• PAT: Rs521cr; up 25% yoy

Remarks:

• Over the past few months, demand for motorcycles with higher engine capacity (>350cc) has grown at a faster rate than other (<350cc) models. Sustainability of this trend will be key to margin expansion.
• Commentary on margin trend and level of discounting for VECV will be keenly watched.
• Commentary on capacity expansion for Royal Enfield and trend of waiting period will be keenly watched.

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