Eicher Motors


#634

Both reviews point to technical superiority of Jawa…


(gautham1) #636

Interesting to see that last 5 replies in the thread https://www.team-bhp.com/forum/motorbikes/176976-i-booked-my-bike-scooter-thread-4.html are about RE interceptor booking . I know this is too small a sample and doesn’t mean much . But I have never come across 5 successive bookings for the same car/bike in the entire thread there.


(Ranga Kiran) #637

#638

and very positive comments on Team BHP from the buyer of Interceptor:

Make : Royal Enfield
Model : Interceptor 650
Variant : - N/A
Booking Date : 17/Nov/2018
Color : Orange
Expected Delivery Date : Jan end - mid Feb
Dealer & City : Navyug Motors, Jalandhar
Freebies : None
Others : None
Accessories planned : None

I went to a motorcycle dealership for the first time in life! (Had owned a second hand RE Bullet - 12 years back). I was very impressed with how they had decked up the showroom to project RE as a lifestyle brand. The booking experience was also super smooth. The store manager was a South Indian. I wonder how he handles the Punjabi speaking burly sardars - the stock customer base of REs in Punjab. Well, he handled me quite well and was decently knowledgeable and quite polished. I hope I can convert the booking and don’t end up cancelling it. I booked only when assured the booking amount of Rs 5000/- was fully refundable.


(vij) #639

They have fixed the vibration issues that deterred many prospective buyers like me.


(CommonStocks) #640

Thee has been comparisons between Jawa and the Classic 350 which is perhaps 90% of RE sales. Jawa looks better on all counts, except for the brand strength where in my opinion RE edges out Jawa. People are right in saying that Jawa motorcycles are better in the 300/350 category, but few points that might work in favor of RE:

  1. Jawa has execution risk in terms of establishing distributors, building a franchise network, scaling up production and maintaining quality. RE appears to have learnt its lessons with the last couple of product launch’s (especially Himalayan) which had gone bad. Will Jawa be able to not repeat the mistakes that RE did?
  2. While Jawa is trying to establish the 300/350 cc category, RE is one step ahead in looking at the market for the 650 cc category with no competition in place. If they can repeat half of what they did with the 350 cc category here, that in itself will open up growth avenues for the company
  3. RE is positioning itself for the global market (although the export share is quite small), Jawa is yet to prove in the local markets.
  4. RE has a unique marketing strategy involving events, communities, accessories along with a good dosage of royal enfield motorcycles making guest appearances in movies and television series (latest being Mirzapur season 1 on amazon prime)

#641

have you seen recent advertisement from Amul? it looks like advertisement from RE as they show 10-15 RE bikes and at end it says Amul, so RE get publicity without spending any money on ad with these ads, movies etc… so it will be difficult to to take RE market share, but I see JAWA will defiantly will eat some market from Bajaj, and it will struggle more…


(Balusu Aditya) #642

I saw a lot of video reviews of the Interceptor 650 from reputed and trusted channels. Most of them seem mightily impressed. Having said that, One common theme I have observed among all of them is the extraordinary refinement in the engine which was a pleasant surprise coming from a Royal Enfield Motor Cycle. And the other common aspect is the constant comparison with the Triumph Bonneville T100. Since Sid is pushing the worldwide sales pitch, I naturally ventured further into the numbers posted by Triumph in 2017. Here is some perspective, if I may:

  1. Triumph Bonneville T100 is currently priced at >9L( £8500 in UK) and is a 900cc machine, with a 18kmpl efficiency. Whereas the Interceptor, with a 26kmpl efficiency, is priced at 2.5L (£5,499.00 in UK). Do note that Triumph did have its own share of Oil Leak problems with the Bonneville T140.

  2. The number-one European Motorcycle brand for sales in North American last April; for financial year 2017, Triumph sold 63,404 motorcycles compared to 56,253 for the financial year of 2016. This was an 11.1% increase in year-to-year sales.

  3. During the 2017 year, global revenues of Triumph grew by £90.9m (about $122 million USD) to £498.5m ($668.5 million). Profits before tax were also up from £16.6m ($22.2 million) to £24.7m ($33 million). That does not look like a great margin play from them.

  4. Back at home,
    Triumph Motorcycles Sales Report (July 2018):

  • Street Triple – 21 units
  • Tiger 800 – 8 units
  • Street Scrambler – 8 units
  • Bonneville Speedmaster – 5 units
  • Street Twin – 3 units
  • Bonneville T120 Range – 3 units
  • Bonneville T100 – 1 unit
  • Bonneville Bobber – 1 unit
  • Tiger 1200 – 0 units
  • Thruxton 1200 Range – 0 units
  • Thunderbird – 0 units
  • Rocket III – 0 units

This does begin to paint a good picture and RE seems to have significant room to grow into. What do you folks think?


(Ranga Kiran) #643

(Amit Jain) #644

Its bad news, with stock trading at PE 30.
If a normal EPS growth of 10% be considered, then next 12 years of growth will be factored into the current price.

12 years is a big number. And a strong reason for the long term investors to panic, if the earnings guidance were to falter.


#645

How you arrive at the number. 12 years of 10% growth will make EPS 3x so PE will be 10…but what’s the calculation logic of saying 12 years of growth factored in?


(Amit Jain) #646

I am using 10% as earning power as the base.
(One must get 10% return on his investment, in the way of Earning Per Share)

30 PE = 3.33 % in earning power.

And how many years would it take 3.33 of earning power to become 10% earning power at a growth rate of 10% per year?

Equation is:

3.33 * 1.10 ^ x = 10
1.10 ^ x = 3
x log 1.10 = log 3
x = 0.477555766 / 0.041392685
x = 11.55 years

At CMP, the Investors are willing to pay for 12 years of future growth. Whereas, when there isnt so much exuberance in the market, some really good companies are availavle at par, meaning one does not have to pay for future growth at all. i.e. they are available at PE 10.

@dineshssairam my cost of capital is 10%


([email protected]) #647

If the EPS growth is 10% and cost of capital is 10% too, wouldn´t the rate of return be same as year 1 forever?


(ranvir dehal) #648

@iivans…Yes and No.

Yes…if the same PE valuations sustain. ( which is very very unlikely for a company growing at 10% )

No…if the market is convinced that the company is not going to deliver any more earnings growth ( ie beyond 10% )…it will punish the stock and the stock price would correct and hence the rate of return would fall.

But the question is…will Eicher be good only for 10% cagr earnings growth for the foreseeable future. I would say …No.

I think it will do better. And substantially so.

But …thats only an opinion.

Disc: invested @ Rs 23,500.


([email protected]) #649

Rate of return will increase… its like bond yield, no?


(Aman Goklani) #650

Challenges galore. I guess the time to grit it out with this stock is approaching. Any weakness / de-rating of the stock price would be a good time to accumulate for long term Eicher investors.

Disc: Invested


#651

I would like to take my words back. Jawa has certainly created right kind of buzz and now the endorsement by the potential customers. Was planning to enter here but would like to wait for Eicher’s response and understanding sales potential and global acceptance for its 650cc bikes.


(Ranga Kiran) #652

(Yatharth) #653

Royal Enfield has reported a 13 percent drop on a yearly basis to 58,278 in December. In December, there was no strike.
Sales of models with engine capacity up to 350cc fell 15 percent to 53,790 units while the sales of models with engine capacity exceeding 350cc rose 21 percent to 4,488 units. The company exported 2,252 units last month, an increase of 41 percent from December 2017.
How do we read these numbers? Sales will remain stagnated like this or do we see it as a temporary set back? Company says that at may make 12%-13% growth this year but so far, it is at 6% only on YTD basis.
Can we say that the era of growth has come to an end? Or is it only a problem for a few quarters ? While Jawa bookings ahsve been frozen, there is no mention of number of Jawa booked. Does anyone here has any information on that?


(Yatharth) #654

Sir, I understand that Jawa capacity for annual production is only 10000 motorcycles per year. Is there anyone who can share the official response?