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Eicher Motors Ltd

| Q2 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤13th Nov 25

Summary : Eicher Motors delivered record Q2 FY26 results, driven by strong Royal Enfield sales post-GST cuts and VECV's robust performance, with management bullish on future growth and capacity expansion despite inflationary pressures.

Management Perspective positive : We have had a very busy and exciting few months with the new launches and some truly proud milestones. We continued the growth momentum forward in the second quarter with a solid performance. The festive season has been particularly very encouraging for us, driven by robust demand, record bookings and the sustained consumer confidence and a clear reflection of brand strength and the market trust we have built over the period of time.

Concall Report Analysis & Insights

Business Overview

  1. EML achieved best-ever Q2 FY26 revenue of INR6,172 crores, up 45% year-over-year.
  2. Highest-ever EBITDA at INR1,512 crores (up 39%) and PAT at INR1,369 crores (up 25%).
  3. Royal Enfield sold 3,27,067 motorcycles in Q2 FY26, dominating the midsize segment with 84% market share.
  4. VECV recorded highest-ever Q2 sales of 21,901 units, growing 5.4%, and holds #1 in light/medium duty trucks.
  5. Launched new Royal Enfield models and refreshes, expanded dealer network, and maximized production capacity.

Future Growth Prospects

  1. Bullish on continued growth post-GST reduction, with strong demand and inquiry rates.
  2. VECV expects better growth rates in H2, driven by infrastructure investments and GST rationalization.
  3. Royal Enfield is expanding capacity to 1.35 million motorcycles, with additional modules kicking in Q1 next year.
  4. International markets show strong growth, with SAARC moving to #1 position and Brazil performing well.
  5. VECV investing INR544 crores for a new 12-speed automated manual transmission factory for global exports.

Management Insights

  1. Festive season was outstanding, driven by robust demand, record bookings, and strong consumer confidence.
  2. GST reforms made sub-350cc motorcycles more accessible, significantly boosting market inquiry.
  3. VECV is focused on long-term value creation through product excellence, global ambition, and customer engagement.
  4. Committed to responsible growth, strong governance, and ethical leadership, evidenced by corporate awards.
  5. E-commerce strategy is a pilot to learn customer behavior and frictionless experience, not for immediate high volume.

Signs of Skepticism

  1. Management needs more time to analyze customer demographics post-GST changes.
  2. 450cc and 650cc demand recovery is slower than 350cc, despite pre-buy activity.
  3. Heavy-duty truck growth numbers are not large due to productivity and rail freight migration.
  4. EV market penetration is very small, with financiers still hesitant to fund electric trucks/buses.

Risk Factors

  1. Highly competitive market for VECV, impacting PAT and EBITDA margins.
  2. Heavy-duty truck demand impacted by increased truck productivity and migration to rail freight.
  3. Slow recovery in 450cc and 650cc motorcycle demand compared to 350cc post-GST changes.
  4. Inflationary pressure on raw material costs, particularly precious metals and aluminum alloys.
  5. Slow penetration of electric vehicles in the commercial segment due to charging infrastructure and financing hurdles.

Good To Know

  1. Royal Enfield won Red Dot Award 2025 for Flying Flea C6 in Design Concept category.
  2. Royal Enfield ranked #1 in 2-wheeler OEM category in FADA Dealer Satisfaction Survey 2025.
  3. Eicher Motors won Golden Peacock Award for Excellence in Corporate Governance 2025.
  4. 98% of energy used at plants is from renewable sources, winning sustainability awards.
  5. VECV signed MoUs with Jio-bp pulse and Tata Power for 6,000+ public charging points.

Key Drivers

  1. GST cuts boost 350cc motorcycle demand.
  2. New product launches strengthen Royal Enfield lineup.
  3. VECV's H2 growth driven by infrastructure.
  4. International market recovery drives export volumes.

Key Analyst Discussions

Competitive Environment

  1. Royal Enfield maintains 84% market share dominance in the midsize motorcycle segment.
  2. VECV holds #1 position in light and medium-duty trucks with 34.8% market share.
  3. International markets like SAARC, Brazil, and Argentina show strong growth and market leadership.
  4. Appealing to government for lower GST on 450cc and 650cc to achieve uniform tax rates and higher volumes.
  5. E-commerce strategy is a pilot to learn and develop a unique playbook, not for immediate volume.

Market Trends & Consumer Behavior

  1. GST cuts significantly boosted demand and inquiry levels for 350cc motorcycles.
  2. Rural retail growth was slightly higher than urban during the festive season.
  3. Inquiry-to-booking conversion rate increased from 20-21% to 29-30% post-GST.
  4. Indian economy remains resilient, supported by infrastructure capex and stable financing conditions.
  5. Heavy-duty truck demand impacted by increased vehicle productivity and shift to rail freight corridors.

Financial Highlights

  1. Subsidiaries are stabilizing and becoming more profitable due to investments and CKD ramp-up.
  2. EBITDA growth (39%) is slightly lower than revenue growth (45%) due to increased operating expenses.
  3. Raw material costs increased by 40 basis points, offset by price increases and product mix changes.
  4. Management focuses on absolute profit growth, not just percentage margins.
  5. Price increases are reviewed quarterly, balancing inflation with market conditions and affordability.

Product Composition

  1. Classic 350 grew 24.5%, Meteor 350 grew 30%, Hunter 350 grew 41%, and Bullet 350 grew 70% in Q2.
  2. Focus is on increasing 350cc capacity to meet higher demand post-GST reduction.
  3. 450cc and 650cc demand is slowly recovering after a pre-buy period before GST changes.
  4. Company's focus remains on the middleweight segment (250-750cc), not evaluating 250cc strategy.
  5. VECV offers CNG, LNG, and electric models across light, medium, and heavy-duty segments.

Strategic Considerations

  1. Capacity debottlenecking increased motorcycle production to 1.3-1.35 million units.
  2. Additional module investment for capacity expansion will kick in from Q1 next year.
  3. International volume grew 49% in H1, with retail higher than wholesale.
  4. VECV's Pithampur factory is a global manufacturing hub for Volvo Group engines and transmissions.
  5. E-commerce pilot on Flipkart aims to understand customer behavior and optimize brand presence.