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Atul Sharma 2025.02.15 12:15:44 +05'30'
“Q3 FY '25 Earnings Conference Call” MANAGEMENT: MR. SIDDHARTHALAL– MANAGINGDIRECTOR& CHIEF EXECUTIVEOFFICER– EICHERMOTORSLIMITED MR. B. GOVINDARAJAN– CHIEFEXECUTIVE OFFICER-ROYALENFIELD& MANAGINGDIRECTOR– EICHERMOTORSLIMITED. MS. VIDHYASRINIVASAN– CHIEFFINANCIALOFFICER– MR. VINODAGGARWAL– MANAGINGDIRECTOR& CHIEF EXECUTIVEOFFICER- VECV & VICECHAIRMAN-- MS. VIDHYASRINIVASAN– CHIEFFINANCIALOFFICER– MODERATOR: MR. MUKESHSARAF– AVENDUSSPARK Page1of18
Ladiesandgentlemen,goodday,andwelcometoEicherMotorsLimitedQ3FY'25Earnings ConferenceCall.Asareminder,allparticipantlineswillbeinthelisten-onlymodeandthere will be an opportunityforyoutoaskquestionsafterthepresentationconcludes.Shouldyou needassistanceduringthisconference,pleasesignalanoperatorbypressingstarandthenzero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference overtoMr.MukeshSaraffromAvendusSpark.Thankyou,and over to you, sir. MukeshSaraf: Thank you, Darwin. Good evening, everyone. Mukesh Saraf here from Avendus Spark. Appreciate everybody logging in. From the management team, I'm pleased to host Mr. Siddhartha Lal, Executive Chairman, Eicher Motors Limited; Mr. Vinod Aggarwal, Vice Chairman, Eicher Motors LimitedandMDandCEOofVECV;Mr.B.Govindarajan,M.D., Eicher Motors Limited and CEO, Royal Enfield; and Ms. Vidhya Srinivasan, CFO, Eicher Motors Limited. I'llnowhandoverthecalltothemanagementforopeningremarks,postwhichwe'llbeginthe Q&A. Over to you, sir. Hi. Good evening, everyone. This is Siddhartha Lal here, andwelcomeeveryonetoEicher MotorsLimitedearningscallforthethirdquarterendingDecember31st,2024.Thishasbeen alandmarkquarterforusatEicherMotorswithsignificantmilestonesand strongperformance acrossbothRoyalEnfieldandourjointventurewithVolvoVECommercialVehiclesLimited. We've recorded our highest ever quarterly revenue EBITDA and profit after tax in this quarter. Starting with Royal Enfield. We've had an incredible few months. Andourcommitmentto pure motorcycling has translated into strong domestic growth, making this our best ever quarter. We launched 2veryspecialmotorcycles,theGoanClassicandtheScram440,both rooted in authenticity and purpose-built design. The GoanClassicintroducedatMotoverse,whichisourannualeventinGoa,isinspiredby the freespiritedmotorcultureofGoaandaplacethat'slongbeenahavenforridersandfor Royal Enfield as well. The upgraded Scram 440, first unveiled at Motoverse 2024, was launched now and is an adventure tourer crossover, built for those whowantamotorcycle that's fun in the city as well as on the trails. So it's multipurpose that way. Thisquarteralsomarkedadefiningmomentinourjourneytowardsthefutureofmobility.We tookourfirststepsintoelectricmobilitywiththedebutofourEVbrand-FlyingFleaandthe progressindeliveringourpromise.Beyondourproductlaunches,oneofthehighlightswasthe 14theditionofMotoverse,wherewehadnearly10,000ridersthatcametogethertocelebrate thespiritofmotorcycling.Itwasapowerfulreminderofthevibrantcommunitythatwehave at Royal Enfield, and that fuels our journey towards a way forward. Andaspartofoursocialmissiontosupport100Himalayancommunities,weconcludedour firstevereditionofJourneyingAcrosstheHimalayas,whichiscelebratingtheregion'snatural beauty,cultureandtraditionsthroughartwork,photography,installations,highlightingthedeep connections between its ecology and people. Page2of18
Moving to VECV now. We had a strongquarteraswellwithmarketsharegainsacrossthe board, across business segments. We just concluded our exciting participation in Bharat Mobility 2025 at VECV, where we showcased a wide range of alternate energy products, includingelectricbusesandtrucksandnewsmallcommercialvehicleplatform,EicherProX. Overall,theperformanceatEicherMotorsLimitedhasbeensuperlative,andwe'veregistered record-breaking performances of best ever across revenue, EBITDA and PAT. So coming to the financials, ourconsolidatedfinancialsforEicherMotorsLimitedforthird quarter FY 24-25. EML clocked its best ever Q3 revenue at INR4,973 crores, marking a growthof19%overQ3lastyear.OurEBITDAisatINR1,201croresversusINR1,090crores last year same quarter. And EBITDA margin stoodat24.2%against26.1%lastyear.Profit aftertaxisatINR1,171crores,whichincludesINR164croresofshareofprofitfromVECV for EML, up 17.6% from INR 996 crores last year. I’d also like to take a moment tobrieflytellyouaboutsomekeyleadershiptransitionsthat were approved at theBoardmeetingtoday.TheBoardhasappointedme,SiddharthaLal,as the Executive Chairman of Eicher Motors Limited. Vinod Aggarwal has beenappointedas ViceChairman,Non-ExecutiveofEML,andthat'sofcourse,inadditiontohiscontinuingrole of Managing Director andCEOofVECommercialVehiclesLimited,ourjointventurewith Volvo. B.GovindarajanhasbeenappointedasManagingDirectorofEicherMotorsLimited,while,of course, continuing asCEOofRoyalEnfield.Additionally,wehaveappointedIraGuptaand Arun Vasu, they have been inducted on Eicher Motors Limited Board as Independent Directors. We're also bidding farewell to our Chairman of 25 years, S. Sandilya, who steps into retirement. He has been with Eicher Group for 50years,sooveraround5decadesandhas really been aguidingforceatEicher,shapingthecompanytowhatitisrightnow.Andhe's had a huge influence on our culture and our performance. OnbehalfofallofusatRoyalEnfieldandVECVandEicherGroup,Iexpressmygratitudeto Mr. Sandilya and wish him all the very bestforhisnewchapterinhislife.Wealsoliketo thankManviSinha,whoretiresasIndependentDirectorafterthecompletionofhertenureof 10years.ManvihasalsohadagreatimpactontheEMLBoard,andwewishherallthevery best. And yeah, I'd like toheartlycongratulatethenext2speakers,bothGovindarajanandVinod Aggarwal, on their expanded roles at Eicher Motors Limited, and look forward to their leadership,theirsupport,theirexperienceindrivingEMLforwardtothenextphaseofgrowth. InowhandovertoGovindarajantotakeusthroughthebusinesshighlightsforRoyalEnfield. Thanks. Govind, over to you. Thank you, Siddhartha. At Royal Enfield, wecontinuedourstronggrowthmomentumwith exceptional performance in the third quarter. During this quarter, we sold 2,69,039 motorcycles, which is up by 17% on Y-o-Y from Q3FY24 basis. And in India, we sold Page3of18
2,41,971 units, up13%fromQ3oflastyear.Whileourvolumesaresteadilyimproving,the premiummorethan125ccsegmentitselfisalsoshowingwitnessofhealthygrowth.Wehave hadastrongretailgrowthof7%inthesalesofmotorcyclesinFY25(Apr-Dec); (12%during the festive period) in India. And Q3 has seen the highest ever domestic retail for Royal Enfield. Intheinternationalmarkets,weshipped27,068unitsinQ3,anincreaseof71%overthelast year. Based on the strong groundwork we laid in the first half of 2024, and detailing and planning our launches, strengthening our operations, refining our marketapproach,ensured we'reallwellpositionedforthemonthsahead.Withtherightproducts,promotion,pricingand presence, we created the perfect momentum, leading to our best ever festive season and a historic milestone for Royal Enfield. Evenastheindustryvolumessloweddown,werecordedpositivegrowth.It'satestamentthat ourexistingandthenewmotorcycles,whichwelaunched,iscontinuingtoperformverywell. SomeoftherecentlauncheslikeBear650,GoanClassic350,BulletBattalionBlackhasdone very well, very well accepted by thecommunity.Andeachmotorcyclethatrepresentswhat Royal Enfield stands for, pure purpose-built motorcycling. The Hunter 350 crossed a milestone of 500,000 sales, cementing its place as one of the fastest-growing motorcycle globally. That reflects its versatility appeal across the diverse markets.I'malsoexcitedabouttheprogresswearemakinginelectricmobilitythatSidspoke about.AtCESinL.A.,weannouncedourcollaborationwithQualcommTechnologies,akey partnership in delivering advanced connectivity to our customers. There's an incredible response for that. We arealsopreparingtolaunchthelimitededitionShotgun650incollaborationwithICON Motorsports. It will be only 100 motorcycles,whichwillbeavailableworldwide.It'satrue collector'sedition.It'sastepforwardinnurturingtheglobalcustombuildcommunity.Beyond motorcycles,wehaveexpandedourretailpresencewith2exclusiveapparelbrandstores,one inPuneandotheroneinGurgaon.Thesestoresofferapremiumrangeofridinggears,helmets and lifestyle apparel that combine safety, function and style. Atanoperation,weinauguratedourfirstfully-ownedCKDplantinThailand,amilestonethat furtherstrengthensourcommitmenttotheAsiaPacificregion.Globally,wehavemaintained ourmarketshareinthekeymarkets.RoyalEnfieldisaleadingmiddleweightbrandintheUK, Number 1 there and among top 3 in Europe, holding 8.5% of market share across several countriesintheregion.IntheAmericas,weholdan8%marketshare.AndinAPAC,wehave reached 9% market share in the middleweight. This quarter, we also had Motoverse2024.Wehadnearlyabout10,000attendees,ofwhich 69% of the people are first-time riders into the motorcycle festival. We tooktheREOWN, whichisthesecond-handmotorcycle,usedmotorcyclesofRoyalEnfieldtothenextlevelby expanding to almost 256 cities across India, making pre-owned motorcycle transaction smoother and more accessible for our consumers. Page4of18
Wehaveagreatstartatawardsandourmotorcycleshavereceivedgreatrecognition.Guerrilla 450 got the Premium Motorcycle award from Motoring Awards and Apparel Brand of the Year.WealsogottheManufactureroftheYearandViewers'Choice,theGoanClassic.Classic 350isthemostGoogledbikebyAckoDrive.Internationally,RoyalEnfield'sBullet350won the Gold Award in the Foreign category at the 2024 Japan Bike of the Year Award. On our environmental, social and ESG journey, we have made tremendous progress. Our Vallam plant has been awarded as the Sustainable Factory of the YearbyFrost&Sullivan IMEA Manufacturing Excellence Award. Eicher Motors continues to feature among the leadingautomakersintheGlobalCorporateSustainabilityRatinginS&PandDJSIassessment for 2024. Eicher Motors is among the top 30th percentile in the global autos. Wealsomaintainedourpositionas#8outofthe90inglobalautosintheSustainalyticsESG ratings.Withseverallaunchesandinitiativeswhicharelinedup,wearewellpreparedforour growth journey in India and global markets. With that, now I'll hand it over to Mr.Vinod Aggarwal,MDandCEOofVECV,totakeyouthroughtheVECVperformanceandupdates. Over to you, Vinod. Thank you, Govind. I will start with the industry updates.Inquarter3financialyear2025, total commercial vehicle industry in the relevant market segment declined by 1.7% year-on-year to 1,17,161 units. This was primarily due to softerHDtrucksandLMDtruck segments,whichcontractedby5.4%and4.4%,respectively,anda1.4%dipinthe3.5to5-ton range.ThedropintrucksalesisattributedtolingeringsoftnesspostUnionElectionsandthe uneven monsoon in many parts of the country. Incontrast,busdemandremainedverystrongwithHDbussurging30.8%andLMDbusrising 10.7%,liftingtheoverallbusvolumesby17.3%.Exportstotalindustryvolumegrewamodest 0.3%, reflecting geopolitical challenges impacting many markets. NowmovingtotheVECVperformanceinquarter3,inthiscontext,VECVdeliveredastrong performance,recordingitshighesteverquarterlyandYTDsaleswith21,012unitsinquarter3 offinancialyear2025,surpassingthepreviousrecordof20,706unitsinquarter3offinancial year 2024.Thisperformancewasdrivenbystrongperformanceacrosskeysegments.Eicher performedstronglyintheLMDtruckmarketwitha36%marketshare.Q3sales,9,702units despite a marginal volume margin drop. Intheheavy-dutytrucksegment,Eichersold5,428units,8.9%marketshare,whilecombined, the heavy-duty sales market share of Eicher and Volvostoodat5,964unitsat9.7%market share, reflecting competitive resilience despite sectoral challenges. VECV's bus business performed very well, posting its highesteverQ3salesof3,749units,up10%year-on-year, with a 20.7% market share, supported by robust demand for LMD buses, 3,151 units plus 12.3% growth year-on-year. Reflecting our growing service and partsnetwork,VECVpartsbusinessalsohitaquarterly record with sales of INR708 crores with a growth of 25.6% year-on-year. Exports surged 44.5%to1,192unitsdespitedisruptionsinSouthAsia.YTDVECVtotalvolumesgrew2.8% Page5of18
to61,488unitswithmarketshareinmorethan3.5-tonsegment,includingexportsgrowingto 18% vs 17.2% in financial year 2024. EBITDAmargin,excludingOCIonetimeincomeforthequartergrewto8.8%,growing0.8% over the same quarter lastyear,reflectingbettercostmanagementandpricingdiscipline.At the recent BharatMobilityGlobalExpo2025,welaunchedoursmallcommercialvehiclein the 2 to 3.5 ton segment, the Eicher Pro X. The Eicher Pro X is launched electric first. Deliveries to the customers will begin shortly. Coming to the financials for VE Commercial Vehicles, third quarter financial year 24-25, VECVrevenuesrosetoINR5,801crores,up5.8%fromINR5,483crores.EBITDAmarginat INR509crores,up16.6%fromINR437croresofQ3offinancialyear'24.EBITDAmarginas apercentagetonetsalesisat8.8%asagainst8%inQ3of2024.Profitaftertax(NonOCI)at INR301 crores, up 44% from INR209 crores of Q3 financial year '24. I now hand over back to Siddhartha for any last remarks. Yes. So we've had a great performance in quarter 3, and that's put Eicherbackonareally strong growth trajectory. And I'm sure we'll carrythisforwardmomentumintoquarter4as well. Our trust on priorities and objectives continuestobeinlinewithouroverallstrategic vision, and we're confident that we'll build on this strong growth momentum. So thank you all for joining the EML's earnings call, and we now move over to the question-and-answer session. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishestoaskaquestionmaypress“*”and“1”ontheirtouchtonetelephones.Ifyouwishto remove yourself from the question queue, you may press “*” and “2”. Participants are requested to pleaseusehandsetswhileaskingaquestion.LadiesandGentlemen,werequest you to please restrict your questions to 2 per participant. You may rejoin the queue for follow-up questions. We will now wait for a moment while the question queue assembles. The first question is from the line ofKapil Singh from Nomura. Please go ahead. Kapil Singh. Hello, Can you hear me You are audible, sir. KapilSingh: Okyeahthanksfortheopportunityandcongratulationsonastrongsetofnumbers.Sir,Ifirst wantedtounderstandifyoulookatthequarterlyperformance,itlookslikethestrategythatwe outlined seems to be playing out well. We had comeoutwithsomenewvariantsandthere seems to be a pretty big response from the customer. Soisthis--Ijustwantedtounderstandhowyouarethinkingaboutthis?Isthissomethingthat youintendtocontinue?Wasthisatemporaryaction?Andthenwe'veseensomesharpincrease in other expenses in particular. So if you could just help us understand, are there any nonrecurring items or these are normalized business expenses? Page6of18
Yes, Kapil, Is this question for Royal Enfield I suppose Yes yes So,RoyalEnfieldduringthefestiveseason,wereallydidverywell.Andinthisquarter,we- ourretailhasgrownbyalmostabout19%.Ourproductactions,whichwehavetakenonthe Classic350,BulletBattalionBlackandallthenewlauncheswith,asmentionedinthelastcall also, about theelevatedmarketingcampaignsandourinventorybuild-uppreparatoryforthe festive season, everything worked very well. AsImentioned,itisoursisagrowthfocus.Soallouractionsinthecompanywillbealigned aroundthegrowth.Wehaveto,allthenewproductswhicharelaunched,allthebrandswhich are to besupported,sothatactivitywillcontinue.EveninthemonthofJanuary,ithasbeen verygood.Wholesalegrowthforthemiddleweightmotorcycleindustrywasalmostabout7% in April to December '25 despite all the noises and the new entrants. Wewillbecontinuingtofocusonexpandingthemiddleweightsegmentandstrengtheningour product positioning in the markets. We will ramp up our brand awareness forClassic650, Goan Classic and Bear 650andGuerrilla450,whichareallinourfocus.Yeah,wearealso building and scalingupourinitiativeslikeREOWN,assuredbuyback,whichareallgaining traction. The motorcycle industry, as such, has seen a muted growthafterthefestiveperiod,butthe middleweight segment has been sustaining the growth.Andwebelievewecanoutgrowthe motorcycle industry inthelongterm,andthat'swhereouractionsareallaligned.Aboutthe onetime expenses, maybe, Vidhya? Yeah.Ithinkotherexpenses,toyourquestion,we had5majorlaunchesinQ3ofthisyear.We hadBear650,newClassic350,BulletBattalionBlackthatBGRtalkedabout,theClassic650, GoanClassic,againstonemajorlaunchinlastyear'sQ3.Apartfromthat,wealsohadanEV brandlaunch.WeunveiledtheFlyingFleabrandinEICMAthisyearandalsoseveralregional activities in Europe against building the brand. So approximately, we've had about INR70 crores incremental spend in Q3 for launches as compared to the previous year. Out of that, almost INR20 crores is towards the EV brand launchandevents.Ithinkapartfromthat,wealsospentalittlebitadditionallyonon-ground marketing activation of about 0.9% this quarter versus last year. So I think that basically explains the mix of our big swing in our other expenses. I guess your question is, yes. Around that cost. So it's one time,yes. Some of it is onetime, yeah. I hope that answers, Kapil. Page7of18
KapilSingh: Yes, sir. Understood. And justthesecondoneisonVECV.We'veseenprettystrongmargin expansionoverthere.SoverystronggrowthinEBITDA.Soanymoredetailsyoucanshare like what was the driver for margin expansion over here and if it's sustainable? No, it's fundamentally better cost management and better price management. There is no specific reason otherwise. Ok ok thank you, sir. That's all. I willcome back in the queue. Thank you.We have the next question fromthe line of Amyn Pirani from JPMorgan. Yes.Thankyoufortheopportunity.Ihadaquestiononexports.Obviously,youhaveseena verystrongrecoveryinexports,butpartially,thelastyear'sbasewasalsoimpactedbecauseof alotofheadwindsintheindividualmarkets.Canyougiveussomecontextofhowthemarkets aredoing?BecausewehadaphaseinwhichEuropewasgoingthroughatoughtimeforthe marketitself.USwashavingitsownissues.Also,ifyouhavesomeviewsonthistariff-related concerns,whicharebuildingup.Sohowaretheindividualexportmarketsdoing,ifyoucan give some context? HiAmyn,youknowlastyear,youallknowwetalkedabouttheinventorycorrectionsandall thosethings.Thisyear,forus,theinternationalmarketperformancehasbeenverygood.We have sold around 70,000 units in international markets from April to December '24.That's almost about 35.5% growthforthelastyear.Moreimportantlyistheretailgrowthhasbeen very good. It is tracking ahead of the wholesale throughout the year. Now the focus is more and more on retails. It's almost about 8%, 9% higher than the wholesale. Markets which are leading the growth are UK, Brazil, Italy, Europe and North America. We have seen, wehavealsostartedBangladesh,andwehavealsodonetheCKD, andweopenedoneofthelargestflagshipstoreinDhaka.Sowearealsoenteringintothenew markets. AsIalwaysmentioned,internationalmarkets,wearecautiouslyoptimistic.Thoughthereare- thesentimentsareslightlyweaker,weseeourpositionsaregettingcementedovertheperiod of time. In the coming year, our focus will be more on the brand building. And in some markets,wearetakingoverdirectentrythroughoursubsidiariesandallthosethingsbecause we see it as a good market for us in the long term. Soasofnow,theinternationalmarketis,itisdoingwell.Notthatthemacrosarebehind,but we are going slowly and steadily, and our progress has been very good, Amyn. That's good to know. Just on the Thailand CKD plant, any broad sense astowhatkindof capacitywe'relookingat?Andwhatisthekindofannualpotentialforyouinthatmarket?And alsoanupdateonwhat'stheCKDcapacityinBrazil?Ithinkyouweregoingtoexpandthatas well. So some recap there would be helpful. Yes.SoThailand,CKDis-Imean,wesignedupwithathirdpartyalmost3yearsback.Now wehaveunderstoodthatthemarketisgood.Andforfuture,wehavetohaveourownsetup Page8of18
becausethedepthofmanufacturingalsohastoincrease.Sowehavegoneaheadwithourown manufacturing facility. That facility is scalable. As of now, we are operating only in one shift, which can deliver almost about 5,000 to 7,000 motorcycles a month because we arealsolookingatthatbase from there, what are all the other markets which have an FTA, which can be made use of. So it's under exploration. There are finer details which are being worked out. But as I mentioned,itisscalablebecausethedepthofmanufacturingisnotveryhighinThailand.Soto that extent, speed at which we wanted to do to scale up will be higher. That's about Thailand. AndBrazil,whichyouhaveasked,soweactuallygoneinforthesecondCKDplant,andthat isalmostinthefinalstages.Themarketisgood.Soatsomepointoftime,becauseofthequota non available, we put the expansion on hold. NowwithourCKDfacility,whicharecomingup,andnowwearelookingatslowlyopening the retail outlets also. So we are bullish about that market in time to come. Amyn Pirani: Ok thanks for that. I will come backin the queue. The next question is from the line of PramodKumar: from UBS. Please go ahead. Myfirstquestionisregardingthegrowthversusprofitabilitypivot.Soweclearlyhavemadea transitionfocusingourpivottowardsgrowth.AndIthinkwe'veseenthebenefitsofthatinthe festiveseason.Butjusttryingtounderstand,havewefoundtherightbalanceintermsofthe value proposition to the customers and the marketing effort?Oristheremoretothisaswe kind of go forward? I'm just trying to understand where will the marketing efforts and the other market-driven activitieswillkindofsettle?I'mjusttryingtogetadirectionaltrend,arewekindofsatisfied with the balance between volume growth and margins what we have currently seen in the quarteradjustedfortheone-offs,ofcourse?Sojustanythoughtsonthat,Govind,Vidhya,you would say, please, that would be very helpful. So Pramod, as an organization, aswehavebeensaying,weareagrowth-focusedcompany. And all the products which we are launching, we are actually adding value back to the products.Wehaven'tincreasedthepricing.Wewererampingupourbrandbuildingactivities and themarketactivationsduringthistimebecausethat'swherewefeltwehavetodomore work on all the new products which are launched. LikeClassic650,GoanClassic,Bear650andthe450ccSherpaengineplatformRoadster,the Guerrilla,whichisanoutstandingmotorcycle,allthosemotorcycles,wehavetodothebrand buildingactivitiesandthemarketactivation.Sothatwillcontinue.Soit's--asweareadding valuebacktotheproductandthemarketingactivationandsupport,whichwehavetodoand brand building activities, growth is the focus. Page9of18
Sonowspecifictotheprofitability,wealwayshavebeenmentioning“profitabsolutepool”is what we have to look at. Okay, so yeah. Okay, Govind, but I'm just trying to understand, have we found the right balanceiswhatI'mtryingtogetat.Arewesatisfiedwiththekindofeffortswe'veputinand the result of what we got in terms of the market response or the consumer response? Yes.Wehavetoconstantlykeeplookingathowthemarketdynamicsisandwhichareallthe areas,whichproducthastobelookedatandsupporthastobedone.Sothebalanceisnotthat we have one answer for it. As growth focus requires, from time to time, we'll keep doing that. And the second question is on the demand response, Govind, because we've been kind of seeing weak demand for the last few years, of course, outperformed in the motorcycle category.Butyes,generally,there'sbeenabitofasluggishdemandgoingintotheseasonand all of a sudden, the demand came in. SoI'mjusttryingtounderstandwhatyouweretryingtodo:abridgeofwheredemandwason a monthly basis before the festive orthemarketsharebeforemonthly--beforefestiveand whereitistoday,couldyoujusthelpusunderstandhowmuchofthisisledbyexistinginquiry converting to actual purchase? Andhowmuchofthisiskindofwinbackfromcompetition?Whatwasthereintermsofsome bitofconfusioninthemindsoftheconsumerwithsomanybrandlaunches,right?Soifyou canjusthelpusbreakdownthecomponents,andalsohowmanyofthemarenewcustomers, which are helped by your additional reach on the semi-urban, rural side? And any color on the regional performance?Atdifferentregions,howtheyhaveresponded during the festive season? And also, any final thoughts on how you'reseeingdemandpost festive because January was very strong. There could be ayear-endphenomenonthere.Buthowareyouseeingdemandasyoustand todaybasedonalltheinputswhatyouhaveonwalk-ininquiriestoallthoseinputswhatyou have? Thanks, Pramod. Yes.ToomanyquestionsyouputitinonethingPramod,butletmejusttrytoaddress.Firstis acrossthefunnelfrominquirytilluptotheconversion,throughthisinquiry,bookingsandthen wholesaleand retail,everything,wehavebeenconsistentlygrowingduringthelastquarter.In fact, in the last quarter, we reached a marketshareofalmostabout10.5%inthe2-wheeler industry in motorcycles. Whatishappening,asImentionedinthelastcallalso,isthatwewillstartlookingatproduct byproduct,whichrequiresamarketsupportonourbrand-buildingactivities.Wewillupthe gameinthatarea.That'swhatexactlywedid.Wealsofoundinthemarketsduringthefestive season what sort of an inventory which we have to keep, that we activated. Page10of18
OurClassic,BattalionBlack,allthoseproducts,whateverthemarketactivitieswhicharetobe done,thatalsohasbeensupported.Soallputtogether,ithasactuallyreallyworked.Andnow there is apositivemomentum,whichI'mseeing,andthat'swhyyoualsomentionedJanuary also has been the growth. That's continuing. Intimetocome,therewillbemoremarketactivationwork,whichwewillcontinuebecause some of the brands like Guerrilla and all, we have to do a bit more work in the brand awarenessitself.AndHunter,wewillbedoingsomeactivities.Therearesomenewproducts which we have lined up. So we are positive about the growth continuing as of now. Pramod Kumar: Thanks a lot, Govind. I will join backin the queue. Thank you. The next question is from the line ofGunjanPrithyanifromBankofAmerica. Before you go aheadandaskyourquestion.Letmeremindparticipantsthattheymaypress “*” and “1” to ask questions. Gunjan, you may proceed. Thankyoufortakingmyquestions.Ijustwantedtoclarifytheonetimeimpact,Vidhya,that youcalledout.It'sINR70crores,whichistodowiththelaunchesinEV,andyoumentioned 90 basis points additional. Is that understanding correct, both your 90 basis points and1.4 percentagepoints,whichisINR70crores,bothofthesearenonrecurringaswelookintothe next couple of quarters? Is that understanding correct? Let me just clarify. INR20 crores out of the INR70 crores is on accounttoEV,okay.And obviously, this is based onthelaunchintensity,andifwehavemorelaunches,therewillbe some launch spend. I mean, but yes, broadly, that is the way to look at it. 0.9% is what we've spent on on-the-ground marketing activation.Duringthefestive,again, likeIthinkBGRhaspointedoutearlier,therecouldbe,dependingon,ourfocusisongrowth, and therefore, we keep looking at our marketing intensity from time to time, yes? Okay.That'sclearnow.Andtheotherfollow-uparoundthisIhadwasthat,ofcourse,you've donealotofvalueadditionintermsofyourBattalionBulletandClassicalso.Andtherewere nopricehikestakenonthose.Soisthereanypricinginterventionthatwetooktowardstheend of the quarter or something that is due as you see theresponsetotheseinterventionsquite positive? Andwhileyoucoverthepricehikes,ifyoucanalsotalkalittlebitaboutOBDrelatedimpact that you may see in the next couple of months? IthinkasfarasBulletBlackorwehaven'ttakenanypricinginterventionstowardstheendof thequarter.Asyouknow,wedon'treallycommentonanypricingactionsthatwemighttake inthefuture.ButIthinkonethingIwouldwanttosayisthatgiventhegrowththatwehave seeninBullet,inspiteofthefactthatweweremutedintermsof,Imean,we'veinvestedin the product, overall our GC has grown as far as across the Bullet family. And we'll continue to add value backto the consumers on the product. That's the focus. Page11of18
Okay.Okay,gotit.Andjustgoingbacknowtothegrowthquestion.BulletandClassicclearly hasseenaprettygoodmomentumoverthelastcoupleofmonths.IfIseeBullet,wearegoing back to the FY'18 numbersthatweusedtosee.Nowintermsofthebrandpotential,thatis withBulletandClassic,ifyoucantalkalittlebitmorehowdoweordoweseemoreupsideto the bullet run rate than we're seeing right now? Andsecondly,onClassicagain,wearewayofffromwherethepeakvolumesusedtobeback in fiscal 18. So just trying to understand,dotheinterventionsthatyou'remakingrightnow give us confidence that there is a huge potential left with these brands, both of these? I think, Gunjan,youreferred2018.In2018time,theproductwhichwehad,Bullet350and Classic 350, we moved on to the J-platform. That is one action whichwehavedone.And Battalion Black, you all have seen we have launched it. The responsehasbeenverygood. Primarily, where the market, where the bullet wasverystrong,inthatmarket,theBattalion Black got accepted very well. Now we are also opening to the other parts of India. Classic,it'sayearofclassicism,whichwewanttocelebrate.Wearedoingalotofactivities aroundClassic.Ifyouremember,wedidthefactorycustomsontheClassicasaspecial.Soa lotofactivitiesandtheGoanClassic,whichwelaunched.SotheClassicwholefamily,there's a lot of activities which are happening. AndtheloveofClassicisalsoback.ConsumersstartedreallylikingthenewClassicandthe colorways,whichwehavelaunched.SoIdoseeinthefuturealsotheloveiscontinuing.But we have to support it, which we will continue to do through market activations. AndGovind,ontheinventoryside,thislastquestionis,isthatsortednow?Wewereinastock out situation. Where would the inventory levels stand now at an overall level, channel inventory? Go ahead. SoGunjan,Ithinkthestockoutsituationonlybecauseduringthefestiveseason,wehadsuch a strong sale during October that there were a few areaswheresomeofthecolorwaysand someofthemodelskindofgotoutofstock.Wehavestockedbackup.Ithinkwearebackto our regular inventory levels. We have 2 to 3 weeks... Yes, 2 to 3 weeks, yeah. Some colorsandSKUs,whichwehavetomatchbecauseasVidhyawasmentioning,during thefestivetime,Imeanitwaspositive.Sosomestock-outsituationsofafewSKUshastaken place. Now the plant team is gearing up to fill that back because we have gone with the replenishmentmodeltoextractthefullefficiencyandsupportthedealercommunityalso.Itis working really well. Gunjan Prithyani: Thank you so much. Page12of18
Thank you. The next question is from the line of Mumuksh Mandlesha from AnandRathi Institutional Equities. Please go ahead. Yeah,Thankyoufortheopportunity.Sir,firstly,toVinodsir,ontheCVindustryoutlook.So howdoyouseetheQ4quarter?Andjustonnext6-to12-monthperspective,canyoushare how do you see the industry growth? Ifyoulookattheoverallindustry,first9monthshavebeensortofastagnantandalittlebit marginal drop around, I think, 2% to 3% drop. However, going forward, we are very optimistic.ThereasonbeingthatifyoulookatthecapitalexpendituretrendsofGovernment of India, first 9 months, they have spent around, on an average, every month, INR72,000 crores.Andbasedonthecurrentplan,thislastquarter,Ithinktheexpectedspendisgoingto bearoundINR92,000crores,INR95,000crorespermonth.Andthatwillbeasimilarspendin the next year as well. Sotherefore,basedonthisincreasedspend,weareexpectingthattherewillbegooddemand inquarter4.Andotherwisealsowithallthebettermoney,whichisgoingtobeavailableinthe handsofmiddleincomegroupswiththebettertaxation,withthetaxationrelief,Ithinkthere will be some better consumer spends, which will have a clearcircularimpactontheentire economy, leading to more consumptionandthenmoremovementofgoodsandservices.So therefore, we are very positive that the commercial vehicle industry next year should do better. And of course, our overall expectation on the GDP growth continues to bemorethan6%, around6.3%or6.5%.Andreplacementdemandisalsogoingtoremainverystrong.Interest rates,whichhavebeencutrecentlybytheReserveBankofIndia,0.25%,thatwillalsohavea positive impact on the overall financing rates. So therefore, I think commercial vehicle industry, based on all these fundamental factors, should do better. Got it, sir. And just on how is the inventory situation in the CV industry, and how is the discounting going, sir? As far as the inventory situation is concerned, inventory is quitehealthy.Ican'ttalkofthe inventory in the industry. Butofcourse,aswellasourinventoryisconcerned,wearequite healthy,andwearewithinournormsontheinventory.Asfarasthediscountingisconcerned, this is steadily improving only. So price management are getting better. More and more realization is there with everyone that the discounts are not good. So therefore, the discounts are also not sustainable in the long run. So therefore, we are expecting that the discount levels should continue to drop. Gotit,sir.Sir,thenextquestionistoGovindarajansir.OntheEVlaunchpipeline,sir,wehave this FlyingFleaandtheStarkcollaboration.Justwanttounderstandwhat'sourtimelinefor the launches for these brands? So on the Flying Flea,whichistheCityPluselectricmotorcycle,that'sabrandfromRoyal Enfield, we unveiled theFF-C6andthescramblerFF-S6,boththeversions.There'salotof Page13of18
activitieswhicharehappening.Aroundthefirstquarterof2026willbethetimewhereinwe will be hitting the market. Got it. And for Stark partnership,any plan to launch the product? Stark is actuallyastrategicinvestmentfromEicherMotors.Primarily,itisallabouthelping each other and understanding. We get the help from Stark in terms of lightweighting, modularitydesignandpushingtheenvelopeoftheinnovationswhichwecanbringinintothe motorcontroller,batterycontrollerandtheintegrationinthewholevehicle.That'swhatweare actually learning from them. And also, for Stark, because we are good in thescale,supplychainoperations,wesupport theminthat.Sothat'sthekindofacollaborationwhichwedo.Thereisnosuchproductwhich we are working around to bring it to the market immediately. Got it. And for Flying Flea, sir,what kind of production capacity initially we would have, sir? Ithink,wearecurrentlyourFlyingFleawillbemanufacturedoutofourVallamplant.Sowe are building a capacity which,wehavementioned,isalmostabout1.5lakhperannum.But that's all scalable because that's a vehicle assembly line, and we will go modular. Andwe always have looked at that we won't put a heavy capex onto this. Wewillgomodularandthat'swhatwearegoodat.EvenforFlyingFlea,dependinguponthe market situation, we will keep improving whenever it is required. Got it, sir. Sir, next question is to Vidhya Ma'am. Just on the gross margin, this quarter sequentially, there was a fall in the gross margin. Is it due to mainly the mix of the products? I think you've kind of answered my question. But basically, I think there are two things essentially because of product mix.We'vetalkedaboutsomeoftheopportunitiesthatwe've donefromaBattalionBlackstandpointoreveninClassic350wherewe'vetriedtomakeitnot toimpactoncustomers,andwe'vealsonotincreasedourprices.SoIthinkthat'swhat andthe productmix,that'swhatisresultinginthegrossmargin.Butonanabsolutelevel,grossmargin has increased obviously. Gotit,gotit.Understood.Andjustlastly,onthecapexside,howwasthe9-monthcapexfor the Royal Enfield and VECV? And what is the guidance for the full year? I think in the beginning of the year, we announced that we will have the capexofaround INR1,000 crores for the full year. So we are on track. And we are likely to be around INR1,000 crores for the full year. Sorry to interrupt, we request you to please re-join thequeue.Youmayaskyourquestions once you're asked again, sir. Sure, Thank you. Thank you.We have the next question from the line of Jinesh Gandhi from Ambit Capital. Page14of18
Myquestionpertainstoexports.Soinexportmarketofallthenewproductlauncheswhichwe have done in the last 12 months, which models are yettobelaunchedinsomeofournew export markets? Well, product in an export market, there will always be a lag, Jinesh. So for example, Himalayan, we are just launching in Brazil. Guerrilla we have just launched at an APAC region.Soit'salltheproductsinthisquarter,mostprobablywillbelaunchcompletioninall the international markets. Including the Classic 650s and Goan650? Yes, all the products. Got it. And secondly, this Thailand CKD, which we are putting up, this will be alsofrom exporttoEuropeanmarketaswellgiventheFTAThailandhasandinthatcontextwhatkindof advantage does Thailand offer to us from that perspective? What is the that yes, sorry, go ahead. But first is thatparticularmarkethavetobetakencare.Sowehavetogetthatright.Sowe haveestablishedthebasethereandtheFTAisbeingstudiedbyourteam,whatevertheASIAN marketsfirst,thenwe'llparallellylookatonaTCObasis,whatmakesasense,whethertosend the full container from India to Europe or fromThailandtothatplace,thatstudyisonand maybe coming year, we will see. If there is a merit to that, we will review it. Otherwise, currently, Europe will be going only from Chennai plant. Okay. But any sense of what would be import duties on our bikes in Europe? Sorry? What would be import duties on ourbikes in Europe? 5%. It's about 5%. Yes. Hello? It's about 5%. 5%,okay.Andlastly,Vidhya,thetaxrateforthequarterwasbelow22%.Isthatanormalized rate? Or we should see going back to 23%, 24%? 24% to 25% is the rate. 24% to 25%, got it, got it. Thanks and All the best. Thank you.The next question is from the line of Sanjaya Satapathy from Ampersand. Please go ahead. Page15of18
SanjayaSatapathy: Sir, my question is can you give ussomeindicationofwhatisthesustainablemarginfrom hereon? What is the sustainable marginfrom here? No, we don't give. We really don't give guidance.You know that. SanjayaSatapathy: I'mjusttryingtounderstandinthecontextofthenumbersthatyouhavecalledoutintermsof the recurring and nonrecurring, if you can give us something? As Vidhya mentioned, some of the expenses because of the hump in the launches, that's one-time.Andgoingforward,that'ssortofahumpmaynotbesomuch.Butwecontinueto have to spendonbrandbuildingandthemotherbrandRoyalEnfieldbuildanaspiration.So there will be marketing activation expenses, which will continue. But the hump may not be so much because these are all some of the products due to the COVID,whichcameupforthelaunchesoneaftertheother.Sothatsortofanexpensewillnot be there. But marketing support activities and activation expenses will continue. Sanjaya Satapathy: Thank you sir. Thank you.The next questionisfromthelineofOmkarRanefromEmkayGlobalFinancial Services. The currentparticipantseemstohavedroppedfromthequeue.Wewillproceedto the next question, which will be from the line of Jay Kale from Elara Capital. Please go ahead. Yeah, thanks for taking my question. So my first question is, again harping on the earlier question,whatwouldyouseeinyourendeavorofbalancingprofitabilityversusgrowth?IfI lookattheEBITDApervehiclealso,itiskindofa7-quarterlow.SoI'mjustthinkingfroma management perspective going forward, are you looking at sustainable margins when you balance profitability versus growth? Are you looking atEBITDApervehiclegrowingfrom here? Because despite the high volumes, we've not really gotten the absolute operating leverage benefits, which were expected when you haveaveryhighvolumegrowth.Iunderstandthe bulkyexpenses,butthemarketingexpenses,likeyoumentioned,aregoingtogoongoing.So howdoyou--whatisyourtargetinthesensethattogrowEBITDApervehiclesustainablyor margins or how should one look at it? See, if growth is a focus, what does it mean when you grow is that,aswementioned,we haven't increased the pricing because we have tobeanaccessiblemotorcycle.Andwealso wantedtoaddvaluebacktotheproduct,whichalsoourconsumershavebeenlookingatfrom Royal Enfield. We are conscious of it. And we are the market leaders and we have the responsibility of continuing to grow,whichiswhatwehavedoneforthelastonedecadein India. Page16of18
AndnowwearetryingtodoitoutsideIndiaalso,themiddleweight.Sowehavetodomore activities around that in promoting the motorcycling as a culture and around that surround systemsofthemotorcycling.Sotherewillbeexpenseswhichwillcontinue.Whatonehaveto look at is not to look at an absolute percentage. The growth has to be looked at on anabsolutevalue,whichwewillactuallygetoutofthe overallrevenueandalsoontheEBITDAoverall.That'showweshouldlookatit,notonthe percentage alone. Understood. Yes. Just onemoreonyourgrossmargin.Soyoumentionedthatthisismainly because of mix. So how would have commodities moved in Q3 versus Q2? And going forward, how are you seeing the commodity projected? Commodity has been largely stable. It wasnotaheadwind,thoughsteelandaluminumhad someuptickhereandthere,butourvalueengineeringhasbeenoffsettingallthosethings.We are studying how it does with the entire situation across the market on the commodity movement and all those things. WewillknowinthisquarterbecauseweareintoanSBPcycle.Soduringthiscycle,we'llonce againbelookingathowtheinflationis,howthecommodityismovingandaccordinglywhat actions to be taken. But as I mentioned, all theseplatformchangesactivitieswhicharedone,firstiswehaveto landthevaluetotheconsumer.That'swhatwehavedone.Nowthefocusonalltheseproducts on the value engineering also will start. Understood. And just one lastquestion.WiththisinterventionofBattalionBlackpricing,et cetera, how have you seen your customer profile change? Has there been an increased proportion of first-timebuyerscomingintoREortheupgrader'scontributionhasincreased? And in that context, how has your RE to RE replacement growth panned out? Look, I think Battalion Black, we launched it into the market because when we launched BulletontheJseries,whichwasthelasttransitionontheJ-platform,themarketcameback, especiallyontheareawheretheBulletwaslovedandlookedatitinadifferentcontext.And they were looking at a few changes which are required. Asanorganization,wequicklywentbackandthenwebroughttheBattalionBlack.Inthose markets,especiallyDelhi,Punjab,Chandigarh,Haryana,andpartofUP,themarkethascome back,dealersarehappy,consumersarehappy.Andnowwearealsoopeninguptotherestof India. Asfarasthefirst-timebuyerswhichyouweretalkingabout,ourfirst-timebuyersisalmost, what,about18%,19%now.Sothat'swhatistheshareoffirst-timebuyers.Upgradingcycle, as I've been always saying that we are waiting forthatmomenttoclickin.Andthat'swhy REOWN brought in. And we are almost there at about 234 towns now. Page17of18
Weareslowlybringinginawarenessabouttheupgradetoourconsumers.Sowearesettingthe basewhenthemomentclicksin,atleastwecanstartgettingintothatjourneyfastersothatthe base is being set as of now, Jay. Jay Kale: Thanks and All the best. Thank you. The next question is from the line of Amyn Pirani from JPMorgan. Please go ahead Thanks for the opportunity. Most ofmyquestionshavebeenanswered.Ijustwantedtoask regarding this OBD2B. Obviously, we'll wait for your price hikes and all. But any broad contextastowhatisthekindofcostinflationthatwemightseebecauseofthis?Andshould we be prepared for any wholesale corrections that you might do as you arerampingupor ramping down the older vehicles and the newer vehicles? So Amyn, maybe I'll answer the second one first. For everytransitionbeitfromBS-IVto BS-VI, we are acompany,wewerenotstartedwithanyoftheholdinventories.Wehaven't goneinthat.We'llalwaysbeconsciousintransition.AndsoasevenOBD2B,thetransitionis well planned, and we have tested, kept everything ready. Yes,youallknowtherewillbesomeamountofcostincreaseduetoOBD2B,whichwillbe there,butwehaven'tdecidedwhatthepriceincreaseshouldbeorshouldn'tbebecausethat's future looking, that we have to wait for some time. Amyn Pirani: Ok. Thank you. Thankyou.Ladiesandgentlemen,wewilltakethatasalastquestionfortoday.Iwouldnow like to hand the conference over to the management for closing remarks. Over to you, sir. All right. Thank you so much for joining the call and look forward to talking toyounext quarter. Thank you. Bye-bye. Thankyou.OnbehalfofEicherMotorsLimitedthatconcludesthisconference.Thankyouall for joining us. You may now disconnect your lines. Page18of18