Eicher Motors, the parent company of Royal Enfield motorcycles, has reported a 50 per cent increase in its net profit for the first quarter of the current financial year, hitting a record Rs 918 crore. This is compared to Rs 611 crore during the same period in 2022-23, an increase driven by a rise in sales and revenue.
During the April-June quarter of 2023-24, the company also experienced a record increase in operational revenue, reaching Rs 3,986.4 crore, up 17 per cent from Rs 3,397.5 crore in Q1FY23. The company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose by 22.8 per cent to Rs 1,021 crore, compared to Rs 831 crore in the same quarter of the previous financial year.
Royal Enfield sold 225,368 motorcycles in the quarter, a 21.1 per cent increase from the 186,032 motorcycles sold during the same period in FY 2022-23. The company announced on Thursday that it has earmarked a capital expenditure of Rs 1,000 crore for Royal Enfield in the current financial year, a 54 per cent increase from Rs 650 crore in 2022-23. Volvo Eicher Commercial Vehicles (VECV) is also planning a capex of approximately Rs 600-700 crore during the current fiscal year, up from around Rs 500 crore last fiscal. The additional investment will primarily go towards the electric vehicle segment, with the company initially aiming for a capacity of 150,000 EVs.
“On the EV front, we have made significant internal progress. We now have a strong and competent team on the engineering and commercial side,” said Siddhartha Lal, managing director of Eicher Motors.
Market expansion through competition
Lal shared that the company is anticipating increased competition from US bike maker Harley-Davidson (HD) and British rival Triumph to expand the mid-size motorcycle market from its current 1 million to 1.5-2 million within the next five to six years. Both these competitors have partnered with Hero MotoCorp and Bajaj Auto to launch their products in the Indian market.
“Most of them are unable to act independently, so they’ve opted for collaboration and contract manufacturing. We’re well accustomed to competition,” Lal said. Currently, Royal Enfield controls over 90 per cent of the market share in the 250-750 cc segment. “We are well ahead of our competitors. We believe that increased competition will help expand the market. Even if we hold 85-87 per cent of a 1.5-2 million market, we are comfortable with that. We are leaving a small portion for competitors to take, if they can. This segment has seen some action and competition,” he added.
Lal credited the company for growing the segment from nearly 50,000 units a decade ago to 1 million units currently. “I’m not concerned about competition. If they aren’t selling bikes and I am outperforming them, that’s what matters. The resale price of the Classic 350 is tremendous,” he added.
“We continue on our robust growth momentum at Royal Enfield, registering our highest-ever Q1 sales, surpassing our previous record in Q1FY19. A key highlight during the quarter was the impressive performance of the Hunter 350, which recently surpassed the 200,000 global sales mark just eleven months after its launch,” said B Govindarajan, Chief Executive Officer – Royal Enfield and Wholetime Director, EML.