Updated February 13th, 2024 at 19:57 IST

Eicher Motors expects export rebound for Royal Enfield

Eicher Motors reported 12.3 per cent increase in revenue at Rs 4,179 crore for October-December quarter, buoyed by strong domestic sales of Royal Enfield.

Business Desk
Royal Enfield | Image:Unsplash
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Eicher Motors has expressed optimism regarding the resurgence of international sales for its Royal Enfield motorcycles over the next two to three quarters, following a prolonged period of struggle in export markets.

The company reported 12.3 per cent increase in revenue at Rs 4,179 crore for the October-December quarter, buoyed by strong domestic sales of Royal Enfield, a premium-priced motorcycle brand.

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However, Royal Enfield's exports accounted for just 6.4 per cent of total sales in the quarter, lower than the peak of 16.8 per cent recorded in fiscal 2022, almost two years ago. The decline can be attributed to elevated interest rates and inflation in key export destinations such as the UK, US, Europe, and Thailand, according to Royal Enfield Chief Executive B. Govindarajan.

Nevertheless, Govindarajan expressed optimism about the potential for growth in international markets in the coming quarters, especially as inflation is expected to ease, prompting countries to lower interest rates and potentially boost sales of premium products like Royal Enfield motorcycles.

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Analysts such as Amit Hiranandani from brokerage SMIFS and Himanshu Singh from Prabhudas Lilladher echoed the positive sentiment, expecting an increase in exports for Eicher, particularly with the impending overseas deliveries of the new Royal Enfield model, the Himalayan 450.

However, challenges persist in the form of trade disruptions in the Red Sea, which have inflated freight costs by at least 25 per cent on certain routes and led to delays of up to 30 days in shipments, according to Eicher's finance chief, Vidhya Srinivasan.

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Eicher's Royal Enfield faced increased competition from locally manufactured Triumph and Harley-Davidson models by Bajaj Auto and Hero MotoCorp, respectively. Nonetheless, robust sales of Royal Enfield and a higher contribution from Eicher's joint venture with Volvo to produce trucks and buses propelled the company to exceed expectations, posting a 34.4 per cent surge in third-quarter profit to Rs 996 crore.

(With Reuters inputs)

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Published February 13th, 2024 at 19:57 IST