CMP: 21,6710768 (As on 14-08-2020)
Revenue from operations 818 Crs
2,382 Cr (-65.42%) YoY | 2,208 Cr (-62.98%) QoQ
Year ending revenue: 9,154 Cr Vs. 9,797 Cr (-6.16%)
Net Profit of (55.18) Cr
451.7 Cr (-112.31%) YoY 304.2 Cr (-118.13%) QoQ
Year ending Net profit: 1,827 Cr Vs. 2,203 Cr (-17.34%)
EPS (in Rs.) (2.02)
16.55 YoY | 11.14 QoQ
Year ending EPS: 66.39 Vs. 80.45
View:
Result is line with the expectation The last quarter has been
challenging for the commercial vehicle industry with almost complete
wash out in the first two months of the quarter on account of the
pandemic due to YoY revenue and profit significantly corrected.
Business Updates & Highlights:
EBITDA
in Q1FY21 was around INR 3.56 Cr Vs. 614.4 Cr in Q1FY20 Vs. 432.2 Cr in
Q4FY20 therefore declined by 99.4% in YoY and 99.1% in QoQ. EBITDA
margin in Q1FY21 was around 0.4% Vs. 27.9% in YoY Vs. 19.6% in QoQ.
Royal
Enfield sold 58,383 motorcycles in the quarter, a decline of 68% from
181,966 motorcycles sold over the same period in FY 2019-20.
VECV’s
revenue from operations was Rs. 641 crores, down by 72% from Rs. 2,255
crores in the same period last year; EBITDA loss was Rs. 72 crores as
against profit of Rs. 137 crs last year in the corresponding quarter.
Loss of Rs. 120 crs against profit of Rs. 38 crs last year. VECV
registered an 84% decline in sales with 2,129 units as against 13,331
units in the Q1 of last year.
Board of Directors of the Company
has fixed August 25, 2020 as the Record date for determining eligibility
of members for the purpose of sub-division of each equity share of face
value of Rs. 10/- each into ten (10) equity shares of face value of Rs.
1/- each EPS has been computed on the basis of number of new equity
shares on the record date.
Financial
ROE and ROCE is around
20% and 25% respectively and book value per share is around INR 3,655
and share is currently trading at 6x of its book value. Company is
currently trading at annualized PE of around 50 (forward PE) which is
expensive as per Industry benchmark. Promoter holding in the company is
around 49.2% which is good and stable. FIIs and mutual fund hold around
26.9% and 9.3% respectively.
Position: Share strong support
price is INR 20,600/18650. Long term investor based on their risk
appetite can continue with the company.
Share View: Share price
high 23,427 (52 week) and now 21,700. Eicher Motors Limited (EML) is
the listed parent of Royal Enfield, the global leader in middleweight
motorcycles. The world’s oldest motorcycle brand in continuous
production, Royal Enfield has made its distinctive motorcycles since
1901., Royal Enfield operates in India, and over 50 countries around the
world. Addition to motorcycles, Eicher has a joint venture with
Sweden’s AB Volvo - VE Commercial Vehicles Limited (VECV) - which is
driving modernization in India's commercial vehicle space, and in other
developing countries. VECV has a complete range of trucks and buses from
5-49 tonnes, and its integrated manufacturing plant in Pithampur,
Madhya Pradesh is the global hub for medium duty five- and eight-litre
engines for Volvo Group.
Opportunities
VECV has signed an
agreement for the integration of Volvo Bus India (VBI) business into
VECV. This will cover the manufacturing, assembly, distribution, and
sales of the Volvo Buses in India, and other rights forming part of the
business. Consequently, the bus manufacturing facility at Hosakote,
Bengaluru, and all employees of VBI will be transferred to VECV. VBI is
currently a division of Volvo Group India Private Limited (VGIPL). VECV
has now become the first company in the CV industry to offer 100%
connected vehicles to its customers. With the advanced EUTECH6
technology backed up by connectivity. EML is expected to maintain its
stronghold in the target sub-segment over the medium term, backed by its
strong brand and value proposition, established track record in the
Indian market and after-sales service network. The good thing is company
is virtually debt free and strong hold by FIIs and mutual fund also.
Risk
EML’s
market share in the overall domestic 2W industry has remained moderate
at 4% over the last two to three years, declining to 3.4% in 6M FY2020
because of its segmental concentration in the premium category. In the
backdrop of coronavirus pandemic led economic slowdown and resultant
impact on the financial performance of the company in FY21. Negligible
topline growth for past 5 years.
Eicher
Motors Stock Split: Board of Directors of the Company has fixed August
25, 2020 as the Record date for determining eligibility of members for
the purpose of sub-division of each equity share of face value of Rs.
10/- each into ten (10) equity shares of face value of Rs. 1/- each**
EPS has been computed on the basis of number of new equity shares on the
record date.
Disclaimer: The
information provided herein is based on publicly available information and
other sources believed to be reliable, but involve uncertainties that could
cause actual events to differ materially from those expressed or implied in
such statements. The document is given for general and information purpose and
is neither an investment advice nor an offer to sell nor a solicitation. While
due care has been exercised while preparing this document, we do not warrant
the completeness or accuracy of the information. We will not accept any
liability arising from the use of this material. The recipient of this material
should rely on their investigations and take their own professional advice.
