Eicher Motors Q3FY18 Concall Summary


Financial Highlights 

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  • Revenue from operations is at Rs.2,269 Crores in Q3FY18 versus Rs.1,835 Crores in Q3FY17, at a 24% growth
  • In markets like Kerala where already 1 in 3motorcycles is the Royal Enfield, then there is only so much headroom for growth but in markets like UP where in 1 in 50 motorcycles is Royal Enfield
  • In richer states where per-capita income is high like Kerala, Goa, Punjab, Chandigarh, Delhi the market share of Enfield is 25%-35%
  • Where there is very low per capita income like UP, Bihar, MP Enfield’s market is 2%
  • Enfield has currently 6% market share in motorcycles and give or take 12% revenue share


  • EBITDA is highest ever of Rs.707 Crores versus Rs.577 Crores last year at a 23% growth rate
  • EBTIDA margin is of industry-leading once again at 31.2% in Q3FY18 versus 31.4% in the Q3FY17
  • There was a change in accounting standard on the government grant so it was accounted for about Rs.8.5 Crores of higher depreciation but also compensated by Rs.8.5 Crores of higher operating income
  • At a PAT level it is neutral

Net Profit:

  • EML had a highest ever net profit after tax of Rs.520 Crores in Q3FY18 versus Rs.418 Crores at a growth rate of 24% over Q3FY17
  • Enfield has currently 20% profit share in motorcycles

Marketing spend:

  • The quarter also witnessed high marketing and promotional activity spend because it was the unveiling of our 650 parallel twin platforms that was unveiled in Europe in the same quarter
  • Enfield measures funnel based on conversions from enquiries to test rides, from test rides to booking, from bookings to orders and deliveries
  • Those areas are constantly tracked and monitoredand are working on methodologies to improve the conversions to improve firstly the number of enquires


  • Additionally on the pricing front, there had beenapproximately a 1% price increase on all of 350cc models effective from the 1st of February
  • The prices in Thailand for Enfield is much higher than in India
  • Volumes in India very high making distribution cost very low and are able to maintain a very strong fixed price in India
  • In all other parts of the world actually the distribution costs are much higher, the transportation costs are higher, the duties are much higher and there are many others factorsleading to higher prices


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  • The net revenue from operations was Rs.2,590 Crores in Q3FY18versusRs.1,885 Crores in Q3FY17 at a growth rate of 37%
  • The EBTIDA is at Rs.226 Crores which is an increase of 75% for the same quarter last year, Rs.130 Crores previously
  • The EBITDA margin as a result is at 8.7% versus 6.9% for the same quarter last year, driven by favourable product mix, improved cost efficiency and of course better operating leverage
  • The net profit after tax is at Rs.133 Crores compared to Rs.58 Crores at a growth rate of 129%
  • There was a strong domestic demand driven by infrastructure development, mining sector, e-commerce which led to robust growth in volumes during the last quarter
  • While total industry volumes including exports increased by 37% over the same quarter last year, VECV volumes grew by 38%
  • sub 5 tonne:The market share increased from 18.8% in Q3FY17 to 27.6% in Q3FY18 and the sales volume increased by 80%
  • 5 to 15 tonne: market share declined from 31.7 same quarter last year to 30.7 this quarter and had a slight market share increase of 0.5% which was driven by growth in sales volume of 12.8% quarter-on-quarter
  • 16 tonne and above heavy duty segment:The sales volume increased by 70%, which resulted in a market share of 4.4% during the quarter versus 4.0% in Q3FY17
  • While the overall industry continues to be weak, VECV had a market share increase from 12.8% to 14.8%
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  • VECV has had successful homologation of 9 meter air conditioned zero emission fully electric intercity commuting application bus and are actively engaged now with customers to gain an early mover advantage
  • The market share in exports of commercial vehicles from India has increased from 12.5% to 13%
  • It is largely driven by demand in Bangladesh, Sri Lanka, Nepal, Indonesia
  • Medium duty engines:total sales volumes hasbeen at 8,830 units for the quarter, which is higher by 51% over Q3FY17

Royal Enfield:

  •  Enfield had a highest ever quarterly sales of 2,06,736 motor cycles versus 1,73,800 odd motor cycles in the same quarter last year at a growth rate of 19%
  • The strong performance in the domestic market continues in the month of January which has already ended January 2018 with the company posting its highest ever volumes of 77,878 units which is a 31% increase over January of last year
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International Markets:

  • Export volumes grew by 68% to 5,578 units over Q3FY17
  • There had been a traction in older markets like Europe and other such markets but also an increase of sales in markets like South East Asia, Latin America
  • In the quarter, Enfield opened six new exclusive stores taking exclusive total overseas store count to 35
  • For the first time Enfield entered Mexico, New Zealand and strengthened its presence in U.K., France, Thailand, Colombia
  • Future Plan:first step is just to have a starting point that means some traction, some process
  • Second is to have a strong position in the midsize market
  • Third step is to become leader in midsize market
  • The fourth step whichis where Enfield is in India to become a relevant player in the overall motorcycle market

 New Products:

  • The response at EICMA, which is the biggest motorcycles show in the world, was absolutely tremendous
  • So in the end of the year Enfield participated at the NEC in Birmingham, the IMS shows in USA, the Sydney Auto Show and various other shows
  • In India Enfield showed 650 twins in its largest community event that was held in Goa, Rider Mania and the concept of Interceptor and Continental GT 650 twins was extremely well received
  • The selling date of twins is not fixed, but internally the launch is on track
  • An entirely updated BSIV, Bharat Stage IV Himalayan which was launched earlier in this financial year and in January, and launched an all new variant which is called the Himalayan Sleet
  • There was 500 of these motorcycles which weresold in an exclusive online sales on the 30th of January within 12 hours, at an average selling of 1 motorcycle every 80 seconds
  • About two months ago Enfield has launched classic 350 with a disc brake, Classic 500 with a rear disc brake; classic 500 was stealth black the name of the variant, and classic 350 is gunmetal grey
  • The demand for these two products which are higher than a regular classic was almost 12,000 bucks it is much more than a regular kind of classic

Tech Centre:

  • The second phase of the UK Tech Centre will be fully operational now after commissioning of the testing and validation equipment
  • Construction of India Tech Centre is on and in the first phase, the huge product development part of it will be ready in the coming financial year

Customer Engagement:

  • In pursuit of international markets and development of the Royal Enfield Brand and motorcycling culture, Royal Enfield concluded first marquee ride for Royal Enfield riders in Thailand which is called the Tour of Thailand 2017
  • The event had excellent response from the 30 owners and loyal fans who participated covering over 1,500 KMs in 7 days and had got excellent coverage in Thailand and created a lot of interest amongst potential customers so that went very well
  • Garage Café:It was opened in Goa in end of December, and first opened its stores to the public
  • It is a spacious 120-seater café which integrates a museum, exhibition centre, exclusive gear store, motorcycle customization areas, and bays and an entire service workshop
  • It is a very relaxed soft sell environment, where people can come in and basically are able to experience the world of Royal Enfield and immerse themselves in the brand but in a non-selling environment
  • Rider Mania: It was extended this year in terms of number of days and lot more content.It had a highest ever participation over 6,500 Royal Enfield riders and enthusiasts coming in
  • 15 NSG Black Cat Commandos were lent Stealth Black Classic 500 which is a new series, and capture a lot of content to them on that ride and were later auctioned off
  • Enfield was able to sell out the auction motorcycles in 15 seconds, all 15 motorcycles and the proceeds were given to our NSG supported charity


  • Enfield has not committed to phase II of Vallam plant and is still in planning cycle
  • The production capacity is 6,00,000 at Oragadam and around half that number in Vallam


  • In Karnataka and Maharashtra dealership would be more concentrated in few cities as compared to state like Kerala which would be much more widespread
  • In Kerala across the board the affordability is pretty good even in the relatively smaller towns, not very different from the bigger towns in Kerala but in Maharashtra the affordability when you go into much smaller towns it is much less than the affordability in bigger cities
  • So it is an affordability issue and not a reach issue in these market
  • In smaller towns, dealerships should have the ability to sell anywhere between 20 to 30 bikes per month and in a much bigger place like in a metro, Mumbai, Delhi, Pune, could do anywhere between 150 to 200
  • The plan for future is to add 100 dealers plus or minus 10 every year