Volume over margins may weigh on Eicher earnings

Leading automotive firm Eicher Motors delivered a better-than-expected performance in the March quarter, driven by robust revenue growth.

- RAM PRASAD SAHU

Despite strong volumes, the company fell short on the margin front.

With ongoing investments in new product development and elevated marketing expenses, margins are likely to remain under pressure in the near term. As a result, earnings estimates have been revised downwards in view of profitability concerns.

Given the stock's 15 per cent gain over the past three months and its premium valuations, most brokerages remain cautious about its near-term prospects.

In Q4, while standalone revenues came in below estimates, consolidated revenues reached an all-time high, surging 23 per cent year-on-year (Y-o-Y), thanks to a strong uptick in volumes. Volume growth, which stood at 24 per cent, was primarily led by Royal Enfield, the two-wheeler division.

However, realisations per unit were slightly lower. The increase in volumes was supported by product interventions at competitive price points, along with sustained brand activation and marketing initiatives.