Eicher Motors has released its Q2 FY25 financial results. The company’s shift in focus from margin preservation to growth has also contributed to market reactions.
As of 9:15 am the shares were trading 6% higher at ₹4,864.95
Key Financial Highlights for Q2 FY25:
- Revenue from Operations: Eicher Motors posted revenue of ₹4,263.07 crore, up 3.6% year-over-year (YoY) from ₹4,114.53 crore in Q2 FY24. However, it represents a 3% decline from ₹4,393.05 crore in Q1 FY25.
- Total Income: Including other income, total income for Q2 FY25 reached ₹4,616.85 crore, marking a 5.2% YoY increase from ₹4,388.31 crore in the same quarter last year. Sequentially, total income declined by 1.2% from ₹4,675.00 crore in Q1 FY25.
- Profit Before Tax (PBT): Eicher Motors reported a PBT of ₹1,362.05 crore, a 4.2% YoY increase from ₹1,307.34 crore in Q2 FY24, but a 5.5% decline from ₹1,441.04 crore in the previous quarter.
- Net Profit: Net profit stood at ₹1,100.33 crore, reflecting an 8.3% YoY growth from ₹1,016.25 crore in Q2 FY24 and a slight dip from ₹1,101.46 crore in Q1 FY25.
Nuavama has upgraded its rating on Eicher Motors (EIM IN) to ‘BUY’ with a revised target price of ₹5,500, up from ₹4,500. Despite a flat EBITDA of ₹10.9 billion in Q2 FY25, below the estimated ₹11.9 billion due to increased marketing costs, the company reported an 8% year-over-year (YoY) growth in PAT to ₹11 billion, supported by higher other income. Revenue rose 4% YoY to ₹43.9 billion, slightly below estimates.
Key Highlights:
- Royal Enfield (RE) Volume & Festive Demand: Domestic RE sales fell 1% YoY in H1 FY25, but a strong recovery of 12% YoY growth is expected in H2 FY25, led by festive demand and a renewed focus on popular models like the Classic and Bullet.
- EBITDA and Margins: Q2 EBITDA remained flat at ₹10.9 billion, with a YoY margin contraction of 90 basis points to 25.5%, impacted by higher marketing costs.
- New Products: Launches like the Bear 650 and Classic 650 in international and domestic markets, alongside new electric motorcycles under the Flying Flea brand set for early 2026, are expected to fuel growth.
- Upgraded Forecasts: Nuavama has increased its FY25–27 revenue and EPS forecasts by up to 8% and 6%, respectively, projecting a revenue CAGR of 9% and earnings CAGR of 11% over FY24–27.
Eicher’s strategic focus on key models, product launches, and expanded export capacity in Brazil and Bangladesh, coupled with the upbeat festive season demand, position it for sustained growth. The stock’s target price has been increased to reflect higher growth expectations, with a Sep-26E P/E valuation of 30x for RE and 20x for VECV.
Despite the growth in profits and revenue, the results fell short of analyst expectations, leading investors to reassess the company’s outlook as it emphasizes long-term growth over short-term margin gains. The market will be closely watching Eicher Motors’ future moves to balance growth initiatives with profitability.
