Eicher rides into Q1 profit but chip shortage cause for concern

Last Updated: Dec 13, 2022 - 10:22 am 53.4k Views
Listen icon

Eicher Motors Ltd swung to a profit for the quarter ended June 30 from a loss a year earlier as it sold more motorcycles, but reported a steep drop in earnings compared with the preceding three months.

The maker of Royal Enfield bikes said it posted a consolidated net profit of Rs 237 crore as compared to a loss Rs 55 crore during the same period last year. However, profit fell 55% from Rs 526 crore during the January-March period.

The company’s revenue more than doubled to Rs 1,974.3 crore for April-June from Rs 818 crore a year earlier but slipped from Rs 2,940 crore in the first three months of 2021.

Eicher’s joint venture with Volvo Group that makes buses and trucks remained in the red. VE Commercial Vehicles, in which Eicher holds a 54.4% stake, posted a net loss of Rs 72 crore for the quarter, compared with a net loss of Rs 120 crore a year earlier. Its revenue from operations, however, more than doubled to Rs 1,639 crore from Rs 641 crore.

The results reflect the disruptions due to lockdowns in the wake of the Covid-19 pandemic. India had imposed a strict lockdown in April-June 2020, hampering business across sectors. Business was returning to normal during the January-March period of this year, but a devastating second wave of the pandemic hammered India after April.

Other key details:

  1. Eicher’s Q1 EBITDA was Rs 363 crore as compared to Rs 4 crore a year earlier.

  2. Royal Enfield sold 122,170 motorcycles in Q1, up 109% from 58,383 units sold a year earlier.

  3. VE Commercial Vehicles’ EBITDA for Q1 was Rs 18 crore, versus a loss of Rs 72 crore.

  4. VE Commercial Vehicles sold 5,806 trucks and buses in the quarter, up 173% from 2,129 units a year before.

  5. Vinod K Dasari stepped down as CEO of Royal Enfield; COO B Govindarajan will replace Dasari.

Management Commentary:

Eicher MD Siddhartha Lal said the first quarter was challenging for the automotive sector overall because of the second wave of the pandemic. Still, Royal Enfield delivered the strongest-ever quarter in international markets. In India, the company’s bookings saw an uptick in June as local lockdowns were gradually lifted.

Lal also expressed concern over the global shortage of semiconductors and said this is likely to hamper production for the ongoing quarter, and possibly through the rest of the year as well.

Dasari said the company is investing in CKD (completely knocked down) facilities to strengthen its presence in key markets. It recently set up a CKD assembly unit in Colombia, the third-biggest motorcycle market in Latin America, following a similar plant in Argentina. The company also opened its flagship stores in the Netherlands and Singapore.

Share Market Today

How do you rate this article?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage


About the Author

Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest News
Sensex, Nifty Fall for 5th Day on Israel-Iran Tensions

Sensex, Nifty Fall for 5th Day on Israel-Iran Tensions

Gold Prices Soar as Iran-Israel Tensions Escalate: Is it Time to Buy?

Gold is often seen as a safe investment during uncertain times. The conflict could lead to an increase in gold prices.