Eicher Motors


(PRSAUDAG) #612


Royal Enfield, the ‘other’ Milwaukee motorcycle company, finding its way in the US


(MHS) #613


(Hashims) #614

The signs of slowing down Eicher’s iconic RE is it real?
Can this be offset by the expected growth in CV? Especially the growth thru Volvo-Eicher JV?

When comes to Volvo for sure it adds tremendous value to Volvo-Eicher JV to bring technological advancement in CV segment to India.

Here is one commercial showcasing launch of one of Volvo’s truck highlighting its sturdiness n stability.
I hope many of you might have watched it longtime ago as it was one of the most popular advt. in recent times having ~89million views.


(MHS) #615

#616

Jawa is getting launched next week. That may cause some serious competition to Enfield.


(MHS) #617

(MHS) #618

#619

Q218 Results are out:

YoY PAT growth is flat though there is 10% volume growth.
QoQ there is degrowth on both volume and PAT.

Disclosure: Holding from higher levels.


(Dhiraj Dave) #620

Key discussion point in Eicher Conference call on November 12 2018:
http://www.eicher.in/uploads/1542081671_Eicher_Motors_Press_Release_for_2Q_FY_2018-19.pdf
http://www.eicher.in/uploads/1542081596_Eicher_Motors_Earnings_Presentation_for_2Q_FY_2018-19.pdf

**Opening remark **
The company is moving ahead to have all models with Anti-locking system. Valla vadam Phase II capacity on track and expect to commence production during FY19-20. Chennai Technical cater would be operational within 6 months. Some staff would move to Chennai center from current quarter.

Strike
The company suffered production loss of 25,000 units from Stake which begin from 24 September to October 31 2018. The strike is still continuing although nearly 70% of capacity utilisation is achieved with support of employee which is not on strike. The company is not willing on have discussion with third party leaders and which is creating longer time for resolution. The other players in area like Yamaha are also suffered due to strike. While company appreciate labour right to form trade union, it does not want interference from external parties which management believe are not only hurting the company but also likely to adversely affect its employee interest. The management first aim to close the strike at the earliest.

VECV
The company celebrated 10 years association with JV with Volvo group. The JV is announced capex of Rs 400 Cr on new plant at Bhopal. During last decade, as compared with industry growth of 3% p.a.; VECV reported growth of 8% p.a…

RE India market
While the industry was adversely affected due to change in regulation about insurance, higher cost due to improved feature, liquidity issue faced in market; the company achieved volume of 70,000. While the large market for the company, Kerala, Maharashtra and Karnataka affected due to adverse regulation/weather company, the company still have good demand for new variant of model. At company level, the company has around 2-3 week order book, while many products are available immediately, some products have long wait list.
Considering the current production loss of 25000 units, the management revised production target downward from 950,000 to 9250,000 units for FY19.

Marketing:
The company increased dealer count to 838 as on Sep 30 2018. It added around 21 dealers during the quarter. While with increase population of vehicle, the spare part and merchandise accessories sales would increase in medium, during FY18, it is less than 10%. The company intends to cover for more dealers to market merchandise. In addition to increase revenue and profit for the company, it would be driver to footfall in dealer showroom which would good target audience for future growth of the company. On Twin launch, the company is hopeful that it would be able to retain RE users who may want to upgrade the bike.

Further due to increase cost of ownership for bike, the company has increased its efforts to facilitate financing arrangement which are customised to customer requirement. 18 months back nearly 1/3 bikes were financed which increased to more than 50%, first time in October 2018. During April September 2018, it was around 45%.

Global market
The company showed its Twin bike in Global market (US/UK market) and got very good review. Interceptor 650 was launched at price of Pound 5500 while Continental GT 650 price in UK was around 6200 Pounds (not sure about prices and there is scope for error)

The management is optimistic about Twin products success in global markets which would drive another road path to growth for long term. It has set it process of validation of products (test drive and feedback loop) with more than 10X time team size on Twin products working on development as compared with previous product launch of the company. The data generated from same has also being analysed and appropriately used on development of products.

Overheads
The company overhead increased during quarter due to media launch of Twin model. Same would be continuing to remain higher during Q3FY19 as well as same would be launched in India. While overheads may decline marginally in Q4FY19, given the pipe line of new products, the company expects overhead to remain at higher level for medium term. Further, the hard commodity prices are also likely to affect margin. The company intends to increase productivity and gain from operating leverage to reduce impact of same.

Discl: Eicher Motor is among by Top 2 holding and my view may be biased. There might be some miscommunication from my side. The investor shall note of that and shall do his/her own due diligence before making any investment decision


(Aman Goklani) #622

Anyone invested in this company or tracking it absolutely needs to watch the India launch video of the twins.

My key takeaway from the video is that RE is striving extremely hard to produce motorcycles that are truly world class. Not only that, they are also focusing deeply on the customer satisfaction aspect of it and continuing to build a riders community (HOGs (Harley Owners Group) anyone?).

I loved the video and really admire Sid Lal’s passion for what he and his company does, its truly infectious.

I really hope RE is able to make a dent in the middle weight motorcycles in India and globally. And in his own words “have the first consumer brand come out of India” - this to me would be a great achievement as there are hardly any Indian brands (esp. aspirational ones) that strike a chord with customers globally. Fingers crossed RE is one such brand a decade from now! I really wish well for this company as an Indian and an investor.


#624

Jawa bikes look impressive. RE may have good competition going forward.


(Deepak Venkatesh) #625

Hi

What wonderful pricing! My chart on product placement needs to be corrected now. I think if the twins are niggle free they will get a lot of existing RE customers switching to these. These two bikes will take away share away from the other 200-400 cc bikes. Personally feel that the Jawa bikes will not be able to create a significant dent in the RE product suite.

Also they seems to be working already on their next engine which even will be of a higher capacity.

This post seems like trying to foresee the future but I will go ahead and say that I think RE is on track to becoming a major force in the coming decades at a global scale.

Also Sid Lal has moved sometime back outside of India and is focusing on the international play.

Rgds

Disc: No holdings ever in Eicher.


(manivannan.g) #626

Jawa has been launched and there’s a lot of craze in the bikers blogs for the same. M&M got the pricing right in my opinion and a lot of folks were enquiring about the bobber model.

The RE classic 350 variants price range is Rs. 1.4 lakh to 1.8 lakh. Seems like Jawa is offering different models for this entry level segment itself.

The Jawa - Rs. 1.64 lakh
Jawa 42 - Rs. 1.55 lakh
Jawa Perak (bobber model) - Rs. 1.89 lakh
(all are ex.showroon price in Delhi)

Its upto M&M to copeup the bikers craze and if they can get the dealership right, they can go for the kill. There’s been a lot of fuzz on RE’s service not being up to the mark. This could turn the crowd towards Jawa if they can offer good service.

Disc: No holdings in Eicher/M&M


#627

Mahindra’s record in cracking executive bike segment has been dismal and this is RE’s turf where customers look for brand and aspiration value. We could recall Jawa bikes making that unique sound in our localities but how many from the younger generation would identify with it now? I guess it will take a lot for them to crack open this market even if the bikes are worthy enough.


#628

No one know how things will unfold. Even RE was a laggard brand not very long ago with quality issues. It will be difficult for Jawa but not impossible.


(MHS) #629

(Vivek Mashrani, CFA) #630

To me this video looked like Steve Jobs talking about Apple products. Clarity of thoughts, focus on innovation, understanding customers, worldclass quality aspirations, passion and above all dedication…I think such kind of companies and promoters leave lasting impression in the world…and changes the way world operates for good…!!

Disclosure: Invested and views may be biased


#631

Checked specs of Jawa. It is formidable competition to RE with more powerful and superior technology engine and same pricing point. If they are able to revive the brand in minds of buyers.


(Yatharth) #632

Please read.

Jawa 42 vs Royal Enfield Classic 350: Spec Comparison


(Yatharth) #633

Also,

Overdrive