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Record quarter driven by premium motorcycle demand and VECV strength:

EIM delivered its strongest-ever quarterly performance in Q1FY27, with consolidated revenue, EBITDA and PAT growing 32.0% YoY, 32.3% YoY and 21.4% YoY, respectively, supported by record Royal Enfield volumes and another strong quarter from VECV. Royal Enfield registered its highest-ever quarterly sales of 330,427 motorcycles, driven by sustained demand across Hunter 350, Classic 350, Himalayan 450 and recently launched Bullet 650. We believe a sustained premiumisation, healthy export momentum and an improving product mix are expected to support earnings growth in the medium term.

EV rollout, product expansion and capacity augmentation strengthen longterm growth:

EIM commenced customer deliveries of its first electric motorcycle, Flying Flea C6, while opening its first exclusive EV store in Bengaluru, receiving an encouraging initial response. The company also strengthened its ICE portfolio through the launch of Bullet 650 and refreshed Hunter 350 variants. To support future demand, EIM is expanding its manufacturing capacity from 1.5 Mn to 2.0 Mn motorcycles in the Cheyyar brownfield project, while approving INR 12.25 Bn towards Phase-I of the Tada greenfield facility, which will increase to a capacity of 2.45 Mn units by FY30.

VECV continues to outperform industry:

VECV delivered another record quarter with 14.8% YoY volume growth to 24,815 units, supported by a broadbased growth across HD trucks, LMD trucks and small commercial vehicles. Continued product expansion, network strengthening and investments across EVs and alternative fuel platforms are expected to enhance Eicher's diversified growth profile and long-term earnings visibility

View and Valuation:

We increase our FY27E/FY28E EPS estimate by 5.2%/7.4%, respectively, factoring in a healthy domestic demand, a sustained premiumisation and faster capacity ramp-up, which are anticipated to support healthy volume growth and operating leverage. We value the stock at a P/E multiple of 27x (maintained) on FY28E EPS based on relative comparison with peers across financial and operating metrics. Accordingly, we maintain our ‘ADD’ rating with a revised target price of INR 8,200

Q1FY27: EBITDA margin is in line, Revenue better than our estimate

* Revenue was up 31.5% YoY and up 9.1% QoQ to INR 66,324 Mn (vs CIE est. of INR 62,632 Mn), led by 24.4% YoY growth in volume and 5.7% YoY growth in ASP

* EBITDA was up 32.2% YoY and up 5.1% QoQ to INR 15,906 Mn (vs CIE est. of INR 15,032 Mn). EBITDA margin was up 13 bps YoY and down 91 bps QoQ to 24.0% (vs CIE est. of 24.0%)

* APAT was up 21.3% YoY and down 3.8% QoQ to INR 14,625 Mn (vs CIE est. of INR 14,246 Mn)

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