The above was the presentation done in Feb 2016.
If the Motilal meeting is truly a 1 on 1, I doubt whether we will get public access to that document
So, who were the buyers of this huge quantity?
It happens to be Europacific fund a two star fund, as per morningstar ratings
During last six months MOSL had started disinvestments in their different PMS …IN EICHER MOTORS…
NOW LETS SEE…THEIR NEW INVESTMENT IN DIFFERENT PMS…
This is EOD CHART…
Till it holds 18161/_on weekly closing basis next target of 21000/+ is open…
In my opinion, the time has come for Eicher to get its valuation based on performance of its CV business. My very first thesis, based on which I had bought Eicher, was the turnaround in CV industry. Unfortunately I was a couple of years early to it. Fortunately, the bike story carried it thus far.
Over the past 4-5 years the company has made huge investments in its CV business and it looks to be on the cusp of delivering the goods now. Currently CV contributes to 60-65% of the sales, but less than 30% of the profits (appx. numbers). It has a huge operating leverage as lot of capacity is available to ramp up production of CVs if demand picks up. And it will add straight to bottomline.
RE Business will be a moderate grower from now on - maybe around 20% pa. And it will be mainly domestic. Till they announce further capacity additions. International sales growth rate will be high, but volumes will be negligible. Polaris will take atleast one year to be counted in the overall scheme of things.
@sammy11 CV business is cyclical as we have seen in past. So I don’t think market will give high multiples for VECV. Though it looks all set for growth, that part of business should ideally get 10-20 PE. There are two unknowns in future of RE in my opinion.
- The saturation point of domestic market. Nobody knows the number yet.
- The international growth and volumes. If an emerging market like Indonesia, Turkey or Latin America clicks, it can bring in enough volume to sustain 25% growth. But this again is pure speculation.
Disc - Invested
Well said Nikhil,
The key driver for growth for Eicher IMHO will be sustainability of premiumisation trend in the Indian Market which resulted in RE volumes growing 5x over 5 years.
While past growth rate can moderate, if one believes that middle class buying power and aspirations are increasing, then it as a possibility that the domestic sales for RE should continue to grow at a robust pace. Bear in mind the addressable conversion market - a million lower cc bikes are sold every month in India.
If management indicates fast tracking expansion plans for 900,000 bikes in CY 18, this will be an indicator that stronger than expected demand continues.
The YoY increase in RE volume for the month of April 2016 was 42%. The growth rates for Jan, Feb and Mar 2016 were 65%, 63% and 52% respectively. So even if RE maintains a 40% YoY increase for the rest of the months, then we are looking at sales of around 7.2 lakh motor cycles in FY17. If this is the case the capacity expansion should happen sooner than expected.
However in the conference call transcript, Siddharth Lal had mentioned that they plan to manufacture 6.75 lakh motorcycles in FY17. This new forecast was revised upwards from an earlier forecast, of 6.2 lakh motorcycles, due to the continued strong demand. So even promoters sometimes underestimate the demand for their businesses
Another excerpt from the all transcript.
Normally what we do is once we get to a number… not an exact number but once we get to a certain hit rate we then try and steady that for a couple of months before pushing forward to the next hit rate whether it is for us or for supplier is another thing. So right now this is our slightly steady phase rather than growth phase in Manufacturing and then of course we will push it up a couple of notches in a few months’ time.
So it looks like the management is trying to see if the demand is sustaining, and if it does for a few months in a row they will increase the capacity. So it might be unrealistic to expect 40% increase in volumes YoY. Obviously this is assuming that on the exports front status quo will be maintained. If there are any positive surprises there, the management might have to increase capacity sooner than planned.
Eicher motor planning to launch 600cc model in North American and European market, Royal Enfield will launch these motorcycles in India as well. Check out the model worth a look.
Thanks. You need to fix the link. It got pasted twice.
Does somebody has any idea about the reception of RE in US market? When I stayed there for 2 months, I could hardly find people driving bikes there. I will be thankful if somebody can post some links regarding the acceptance.
Royal Enfield North America is Expanding its Dealer Network 0
BY GREG JONES ON MAY 24, 2016 NEWS
Royal Enfield North America (RENA) is actively recruiting new dealer partners to join the rapidly expanding global enterprise and bring the oldest continuously produced motorcycles in the world to the United States and Canada. The company, a division of Eicher Motors (based in New Delhi, India), is leveraging its recent global momentum to reach new markets…
Don’t know about the US markets, but I have seen some bike review videos by Colombian bloggers/bike enthusiasts. These were videos i Spanish with English subtitles.
What do they like about RE:
- Vintage look (especially Classic Desert Storm)
- Good control on turns
- Mesmerizing sound (these are the exact words)
What do they not like:
- Vibration when speeds > 100km/hr
- Lack of power when they drive on highways
- Fuel consumption
Siddharth Lal has acknowledged that for western markets, where bike enthusiasts will mostly drive their bikes on highways/cross country, RE would need to produce a ‘highway-worthy’ motorcycle (> 600 cc) for these markets. Many media reports suggest so.
Thanks for the update mate. I read on internet that now the vibrations are lesser as compared to earlier at 120 Km/hr
2. Lack of power was the biggest disappointment for them
3. This point is surprising because in the video I watched, they were quite happy with the mileage.
In the last conference call the management refused to share volume numbers for the Polaris JV. The reason given was that the JV partner is not comfortable giving out numbers yet.
There could be 2 possible explanations for this:
- The numbers are really bad and the management would start sharing them only after they start gaining traction.
- The numbers are fantastic (relative to the fact that the launch is fairly recent) and the management wants to build the distributor network so as to create a high barrier for entry for any competitor to gain entry in this segment.
Could be a combination of #1 and #2. Has anyone got a chance to visit a Multix distributor and find out how the model is doing?
VERY NICE ARTICLE BY CA ANUPAM GUPTA.
DISCLOSURE: I AM INVESTED SINCE 2012 2013…25% sold for purchase of house at 20200/-planning to reivest below 17000/-…
Castrol India Ltd, Eicher Motors Ltd and Kotak Mahindra Bank were the three that did not conduct a board evaluation in 2015 despite the mandate