Eicher Motors Ltd. rode strong demand for Royal Enfield motorcycles to deliver a steady March quarter, aided by robust volume growth, though Ebitda margin fell 60 basis points sequentially to 24.9% due to higher raw material costs.
Margins are expected to remain under pressure. Eicher Motors expects commodity cost pressures of about 3-3.5% in Q1 FY27. To partially offset the impact, Royal Enfield implemented a 1.75% price increase in April, while VE Commercial Vehicles raised prices by about 2%.
Consolidated revenue rose 16% year-on-year to ₹6,080 crore in Q4 FY26, and Ebitda was up 20% to ₹1,514 crore.
Nuvama Research expects growth to continue with a 15% annual volume increase over FY26-28E. This momentum will be driven by a 16% rise in domestic sales and 11% in exports, fueled by strong demand for core models and upcoming launches such as the Bullet 650cc, Himalayan 750cc, Flying Flea S6 EV, and a new 250 cc motorcycle, Nuvama said.
Premium bikes, younger buyers
Royal Enfield continues to benefit from Indian consumers' growing preference for high-end motorcycles. It had 87% market share in the premium motorcycle category above 250 cc in Q4 FY26. Royal Enfield’s volumes grew 12% year-on-year to almost 318,000 units in the previous quarter. One in three Royal Enfield buyers is now under 25, reflecting the brand’s growing appeal among younger riders, B. Govindarajan, chief executive officer of Royal Enfield and managing director of Eicher Motors, said during the earnings call.
Eicher Motors is stepping up investments for future growth. The company plans to expand Royal Enfield’s annual production capacity from around 1.4 million to 1.6 million units by July. A brownfield expansion in Tamil Nadu at an investment of ₹958 crore is expected to raise capacity to 2 million by FY28. Eicher has also announced a new greenfield manufacturing facility in Andhra Pradesh.
Meanwhile, the company has also formed a 50:50 joint venture Volvo Group for vehicle financing. Eicher will invest ₹750 crore in the JV, which will provide financing solutions across Eicher, Volvo and Royal Enfield products in India. The VECV business continues to benefit from a healthy order book, although macroeconomic weakness could affect demand ahead.
Eicher’s shares gained 6% on Monday to ₹7,413 on upbeat domestic volume growth prospects. Motilal Oswal Financial Services said the stock appears fairly valued. The brokerage values Royal Enfield at 28 times estimated FY28 earnings per share and VECV at 12 times EV/Ebitda.
However, exports will need closer tracking as weak demand in some international markets, including the US and Europe, could cap near-term growth.