My feeling is that Eicher will surely be affected by demonitization, atleast on the 2-wheelers side. Though we can say the impact will be less than that on bajaj and hero, since royal enfield caters to a niche segment of customers. Bajaj has already estimated a 25% Y-o-y degrowth in next month sales in an interview .
Overall the immediate future does not look good for 2-wheelers segment, since a majority of transactions were done with cash. There is a possibility that we might see further correction when the sales figures are out, but on the long term the story seems to be intact.
Disc-Not holding, looking to enter at around 19000 levels
Hardly any demonitization impact. Since they have around 2-3 months waiting period, even if some would have canceled orders there would be hardly any change. I think those Rs 10 lakh+ Bentley, Triumph, Kawasaki and Harley Davidson should be the first to be affected (if at all) and then our Rs 1.5 Lakh RE.
Eicher and Maruti models are in high demand, and there is usually a waiting period for their models. So if someone books a model 3 months in advance, i.e. in August, and it is delivered in November, when does the company record the sale - August or November? If they record it in November then the numbers should not surprise you.
Sales is booked when delivery is made and delivery is made when payment is received from customer. Sales booked by company depends on how company books dealer stock as inventory on its books or sales to dealer.
Receivables will be a good number to look at in this context. If company is making sales on credit to clear the inventory and keep factories running, then receivables will jump (and may go bad later). But we won’t see that data until May-June of next year.
Find enclosed a link on youtube providing some idea about propsective product launch. I do not have any idea about authencity of the news and reader shall take its own due diligence before taking any decision. Having said that, I thought it is worth sharing.
The business is as strong as ever. The “cult” of Royal Enfield is alive and spreading to different countries. Recently on a visit to Vietnam, one of the tour operators shared he was very impressed with Royal Enfield. He shared that he was saving money for last 2 years to buy an Enfield (after his boss bought one). RE is an aspirational product. As long as it remains so, margins will be high and sales will keep on ticking. I agree with what Siddhartha Lal shared in a recent interview at Davos (link available on moneycontrol.com), - Royal Enfield has barely scratched the surface and their is a long way to go
Disc: Invested - Plan to hold long term. Views might be biased
Possible. However, I see more issue on production limitation as Yamaha also register 20% sales growth in sale during Feb 2017. I doubt that domenitisation would have impact only on Royal Enfield sales after lag.
The other possibility I can think of is if you see <350cc has grown at 25 % but it’s the >350cc creating dent, high price premium bikes finding less buyers due to demonetization. Were these buyers from specific states paying in cash type ? Also , any idea what’s the post booking wait time of >350cc bikes of richer vs Yamaha .
Also it would be interesting to compare Yamaha 350 cc bike growth with eicher as I believe there could be a possibility that major sales of Yamaha happening around 200cc type
