Eicher Motors


(Dhiraj Dave) #406

Conference call highlight:

  1. Opening Remark by Mr. Lal on RE: Highest ever margin in RE at > 30% EBITDA level. The company has started working on third plant capacity. Siddharth Lal was confident to reach production of 675000 by end of FY17. The waiting period is around 3 months which varies across region and model. As on date total 566 dealers for RE. Open a new store in Manila. Technology centre in Chennai is expected to start in 1 year while UK would be ready by early 2017. Himalaya model is extremely well received by the market. Booking for Himalaya is now open to all centres in India. This year the company successfully completed 13 edition of Himalayan Odyssey with more than 100 bikers participating. This time specific woman only Odyssey was introduced with support service staff of woman. Nearly 20 woman participated in the event. In June 2016, Participated in Event organised in South France where is shown two customised bikes of RE which was very much appreciated by the visitors. Outlook for RE remain extremely strong.
  2. Opening remark by Mr Lal on VECV: The company has maintained market share in almost all segment. It launched Sub <5 tonne segment a new product where it traditionally has no presence and within quarter captured around 15% market share in that segment. 5-15 tonnes segment is Eicher stronghold and continue to show good growth. It has all three months of quarter reported sales > 1,000 units per month which was number the company was aiming to achieve almost for 5-6 years. In Bus, Eicher lost market share marginally. The medium duty engine sales was 4622 unit which was 6.2% growth over last year. In Exports, industry growth was around 20%, while Eicher growth was very high at around 92%. (Not sure for 92% number)
  3. Eicher Polaris: Now has presence across 60 locations in 8 states, Getting momentum in target market.
    Question and answer key highlights:
  4. Despite 2% growth in CV industry growth in June and news of decline in freight rate, the company expect some issue in Heavy Duty vehicle. In Medium duty vehicle, it expect growth momentum to continue. In Heavy duty also, it has only 6% market share and significant scope for growth higher than industry rate by capturing market share with new product launchs.
  5. RE growth is now driven significantly tier 2 and semiurban/rural area. the company is increasing attempting to increase service center and dealer network in those market. The company aims within short period, sales of around 15-20 vehicle for a new dealer as that level it make sustainable business for dealer and hence long term growth for the company. The company does not intends to increase sales growth through customization as currently main focus is on driving production and maintaining sales growth in domestic market. It intend to change to Engine for RE as well as for VECV to comply with new environment norms.
  6. The company did face some minor problem in Himalyan model. Out of 2000 model, nearly 15-20 model need some service update. The company took initiative to address the issue which has in turn increase goodwill of the company among the customer. The potential target audience for Himalyan would be typical < 150 CC driving person or also current RE user who want to upgarde and get aspire by adventure bike.
  7. The company does not intend to launch economic segment in order to stop customer switching due to waiting period. It rather would attempt to address supply side.
  8. In global market, the company has just launched product in past year and hence small losses are reported by subsidiary in Barzil. The company want customer to enjoy ride and get market feedback. Once it get feedback, it would export bike from India and over a period of time may look at manufacturing part of of bike in that particular country.
  9. Exclusive gear stores are expected to contribute to sales growth in medium term. It also intend to increase service centre along with dealership to give complete satisfaction to the enduser.
  10. In product mix, > 500 CC growth has almost remain stagnant at around 11,000 units. The increase in Rural market (with low per capita income and hence potential of lower price bike) and also dealers familiarly with Classic were two main factors. The company is addressing same by training dealers.

There might be some error in my end while transcribing the note. The reader shall do its own due diligence before making any investment.

Discl: Eicher is my largest holding, and sold less than 5% of my holding during last month. My view may be biased due to my interest.


(JKS) #407

900K is the new number Sid is talking about RE run rate by 18-19 and Yes 35% margin too


(Dhiraj Dave) #408

What I like was appreciation of Rajeev Bajaj by Siddharth Lal. This is really good to have positivism and appreciate your competitor. Somehow, developing more and more confidence in Siddharth Lal.

Other interviews on the TV channels
http://economictimes.indiatimes.com/et-now/auto/strong-responses-coming-for-products-from-smaller-towns-eicher-motors/videoshow/53454885.cms


(Sunday) #409

In the last 10 years, we were focused on to just become relevant in big cities. And now that we are relevant, I believe in larger cities, in the smaller town they are demanding the products.
“We are adding more than 2 dealers every week in small towns. And that is from where the expansion is coming from.”


(JKS) #410

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/FDCE5308_FCA7_451E_9A8B_FAB28EA41213_103258.pdf
July figures came out a few minutes ago. 53K RE


(Dhiraj Dave) #411

Moderate growth 18.3% in July CV Sales for VECV
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=ede4814a-36d3-4cb7-a0f3-744697bc5060


#412

A Conversation With Rod Copes, President, North America For Royal Enfield Motorcycles

http://www.forbes.com/sites/jasonfogelson/2016/08/01/a-conversation-with-rod-copes-president-north-america-for-royal-enfield-motorcycles/#7ed0a85c1fc7


(Dhiraj Dave) #413

Excellent interview, thank for sharing link


(Dhiraj Dave) #414

One negative development about resignation of critical person from RE team


(JKS) #415

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/2B262599_B80F_44EB_86F3_D03D324A481E_111301.pdf
Aug figures came out a few minutes ago. Similar run rate. Total of 55k with 32% m on m and 35% YTD Y on Y

VE update for Aug
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/3EF1AFE2_55FF_4EC1_B0A2_7E59B0B46E94_115910.pdf


#416

Royal Enfield hikes prices across portfolio by up to Rs. 3,600

  • The increase ranges from Rs. 1,100 to Rs. 3,600 with immediate effect.

  • Second price hike within the span of one year.

  • Keeping up with its promise to introduce one new model every year, Royal
    Enfield is now working on updating existing range, while its flagship
    offering - a 750cc twin-cylinder cruiser is also under development and
    will help the company achieve its aim of becoming one of the foremost
    players globally in the middle-weight segment


(MHS) #417

Rajiv Bajaj says new launches will take fight to Royal Enfield

Read more at: http://www.moneycontrol.com/news/business/new-launches-will-takethump-outroyal-enfield_7488641.html?utm_source=ref_article


(MHS) #418

Q2 Results:

Eicher Motors Ltd has announced the following results for the quarter ended September 30, 2016:

The Unaudited Standalone results for the Quarter ended September 30, 2016

The Company has posted a net profit of Rs. 3961.60 million for the quarter ended September 30, 2016 as compared to Rs. 2569.30 million for the quarter ended September 30, 2015. Total Income has increased from Rs. 15100.50 million for the quarter ended September 30, 2015 to Rs. 20551.10 million for the quarter ended September 30, 2016.

The Consolidated Results are as follows:

The Unaudited Consolidated results for the Quarter ended September 30, 2016

The Group has posted a net profit after tax, minority interest and share of profit of associates of Rs. 4131.60 million for the quarter ended September 30, 2016 as compared to Rs. 2845.60 million for the quarter ended September 30, 2015. Total Income has increased from Rs. 15100.50 million for the quarter ended September 30, 2015 to Rs. 20474.70 million for the quarter ended September 30, 2016.

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/D516E9F1_5693_4691_8DBD_D19126CEC09F_143030.pdf


(JKS) #419

SIAM figures for RE/Oct sales is out…usual 59k runrate…
http://www.bsealerts.in/ann.php?170207


(JKS) #420

http://www.bsealerts.in/ann.php?170213
Q2 RESULTS are out. Came out seconds ago.
Fabulous results. Could not have asked for anything better


(JKS) #421

VE OCT figures
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/6B150D07_8FF5_4525_A4C9_71E34DFB15C4_154743.pdf


(Dhiraj Dave) #422

@KS16
Sir, 59,127 and 55,000 has difference of 8% !:wink:
Rounding off would be 60,000 then 55,000 in my view. Probably good effect of Diwali season is shown in October numbers.


(JKS) #423

@dd1474 apologies. Thx for pointing it out. a slipup. was traveling in US and groggy eyed, when I put that in…corrected


(vinay ambekar) #424

http://content.icicidirect.com/mailimages/IDirect_EicherMotors_Q2FY17.pdf

Currently RE growth runrate is around 60000 units, which is YoY growth of 33% (growth rate used to be 45% plus last year). This is expected to continue for 2-3 more quarters. Towards the end of FY19 when production will increase to 9 lakh per year (ie 75000 per month), the base for comparison will be 60000 (current production), which implies 25% growth rate.

My feeling is that, once management is half way towards completing its expansion plan (9 lakh units) it will announce another expansion. This also will most likely be enough to sustain a 25% growth rate, as I think the company will be looking to settle down at this growth for next 3-4 years. My feeling stems from the fact that the waiting period has come down from 6 months (2-3 years back) to 2-3 months now. Company will be looking to maintain this waiting period (brand positioning wise).

After almost 2 years, my initial thesis of investing in Eicher seems to be playing out ie CV business. It is posting healthy numbers and taking away market share in its category. A large part of the capacity still remains unutilized, and prospects of increasing operating leverage remain.

Discl – sold 17% of my shareholding recently at 24-26K. Holding on to the rest.


(Suneel) #425

any idea on the impact of demonitization on eicher?