Shares of Eicher Motors, the parent company of Royal Enfield motorcycles, surged nearly 3 per cent to touch a high of Rs 3,478 in intra-day tradeon Friday after the company posted its highest-ever net profit for the first quarter of the current financial year.
The company reported a net profit of Rs 918 crore for the June 2023 quarter, up 50 per cent, when compared with Rs 611 crore in the June 2022 quarter.
The company also saw a record rise of 17 per cent year-on-year (YoY) in revenue from operations at Rs 3,986.4 crore in Q1FY24/ Earnings before interest, tax, depreciation, and amortisation (Ebitda) was Rs 1,021 crore, up 22.8 per cent YoY.
Further, the company said it has lined up a capital expenditure of Rs 1,000 crore for Royal Enfield during in FY24, up 54 per cent from Rs 650 crore in FY23.
Brokerage firm Axis Securities has retained its ‘Buy’ rating on the stock post the Q1 results, with a price target of Rs 3,800.
“The company has multiple models pipeline ahead. The management expects robust domestic demand in FY24 on account of the festive season, increased credit penetration (6 per cent of total motorcycles sold), and higher discretionary spending. Hunter sales have reached 16,000 – 17,000 units per month and have further potential to grow with adoption in rural areas.”, the brokerage said in a note.
In the quarter ended June 2023, Royal Enfield sold 225,368 motorcycles, an increase of 21.1 per cent from the year ago period. Meanwhile, sales of Hunter topped the 2,00,000 mark in just 11 months from the launch.
In the month of July, Eicher Motors registered a 32 YoY growth in its total sales as the company sold 73,117 units, compared to 55,555 units in July 2022.
However, international business for the company took a hit as sales declined by 22 per cent to 27,590 units as against 38,589 units last year.
At 09:55 AM, the stock had pared gains, and was up 0.6 per cent at Rs 3,399, on volumes of around 24,000 shares on the BSE. Meanwhile, the S&P BSE Sensex was up 0.4 per cent at 65,471.
In July, shares of Eicher Motors shed 6 per cent amid worries over rising competition after peers Hero MotoCorp and Bajaj Auto announced foray into premium bike segment with the launch of Harley Davidson and Triump, respectively. In comparison, Hero MotoCorp had rallied over 10 per cent, and Bajaj Auto surged over 5 per cent last month.