Eicher Motors shares fell today after Royal Enfield maker reported a 6.42 cent on-year decline in the consolidated net profit at Rs 498.70 crore for the quarter ended December 31. The company had posted a net profit of Rs 532.95 crore in the same period of the previous year. The brokerage company Motilal Oswal Institutional Equities has given a buy rating to the stock with an upside of up to 24 percent. “Our estimates remain largely unchanged. We do expect some volume weakness in both RE/ VECV over the next 6-9 months, as the impact of BS6 cost inflation would be fully absorbed by then. More importantly, we expect the new platform for Classic/Thunderbird/Bullet to be the game changer, driving volume recovery in 2HFY21,” Motilal Oswal said in a research note.
Around 1 PM, Eicher Motors shares were trading 2.83 per cent or Rs 577 lower at Rs 19,849 apiece on BSE. Eicher Motors has hit an intraday high of Rs 20,500 and an intraday low of Rs 19,680.
“The premium segment should grow 5% in FY21 due to 1HFY21 being slow. Network expansion continues with addition of 7 large format stores to 939 stores and 250 RE Studio stores. It expects to add another 250 RE Studio stores by Mar’20,” Motilal Oswal said.
VECV remained profitable-
Eicher Motor’s net sales were 1.28 per cent up at Rs 2,314 crore in December 2019 from Rs 2,341.06 crore in a year-ago period. “While the commercial vehicle industry continues to face challenges due to slowdown, VECV (Volvo Eicher Commercial Vehicles) remained profitable despite a sharp decline in its volume,” Siddhartha Lal, Managing Director said. The net profit of VECV declined to Rs 30 crore from Rs 76 crore last year. Royal Enfield’s volumes fell 13 per cent on-year to 63,520 units. Volumes for up to 350cc motorcycles declined 13 per cent to 59,200 units and above 350cc segment, volumes fell 10 per cent to 4,320 units.