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In-line Q2 print; strong growth outlook priced in

Eicher Motors (EIM) reported an in-line Q2, with revenue up ~45% YoY at Rs60.7bn, driven by robust RE volumes (up 43% YoY/23% QoQ to ~326.4k units) and steady realizations (flat QoQ). EBITDA was up 39% YoY at Rs15.1bn, with margins at 24.5% (vs 23.9% in Q1/25.5% in Q2FY25), while APAT rose 25% YoY to Rs13.7bn. The management is optimistic on growth, with festive retails (Sep-Oct ’25) up 45% YoY, expected to sustain in H2 with GST-led demand tailwinds and a strong rural pickup. The 350cc portfolio continues to be the key growth engine, aided by healthy online conversions and product refreshes, while the 450/650cc portfolio saw a dip after 22-Sep; however, the 650cc portfolio is seeing relatively better signs of recovery. Capacity utilization remains high (now ~1.2mn units), with debottlenecking and new module addition expected to raise capacity to >1.35mn units. While near-term growth visibility is strong (we build in 19% FY26E remainder volume run-rate, 9%/5% in FY27E/28E, with FY27E/28E EBITDAM of 25%), we believe current valuations at 29x Sep-27E PER are rich (refer to our thematic Yet another mega shift in motion, Ather – The Frontrunner). We retain ADD and TP of Rs6,900.

Overall in-line results with strong topline growth

Revenue grew ~45% YoY to Rs60.7bn (largely in-line with estimates). RE volume was up 43% YoY/23% QoQ at ~326.4k units; realization was flattish QoQ at Rs189k/unit. Consol EBITDA came in at Rs15.1bn (up 39% YoY) with EBITDAM of 24.5% (vs 23.9% in Q1FY26, 25.5% in Q2FY25). Adjusted PAT stood at Rs13.7bn (up 25% YoY).

Earnings call KTAs

i) Festive momentum, GST benefit, and rural strength drove the retail traction in H1, expected to sustain in H2. Moreover, capacity expansion and debottlenecking will ensure supply keeps pace with the growing demand. The 350cc core portfolio remains the key focus area, while the 450cc/650cc portfolios are expected to recover after the slight dip in demand post 22-Sep. ii) The mgmt highlighted that demand post GST-cut remains buoyant, with strong enquiry/healthy conversions (~29-30% online conversion rates, up ~10ppts YoY). iii) Classic 350 volumes grew 24.5% YoY, aided by marketing campaign initiatives; Meteor 350 was up ~30% YoY, and Hunter 350 (with new color variants) was up 41% YoY. Bullet 350 saw exceptional growth of ~70% YoY, aided by the new ‘Battalion Black’ variant. iv) Margin impact of ~40bps due to higher precious-metal costs, largely offset by pricing (+50bps) and improved product mix. v) Pricing strategy is stable, with no near-term price hike planned despite strong demand; next review likely on a quarterly basis. vi) Exports up 49% YoY, with retails ahead of wholesales. Brazil, Argentina, LatAm see strong performance; Europe/APAC steady, SAARC (notably Nepal) seeing good growth. RE maintains the #1 position in Nepal and strong rankings in UK, Brazil, Thailand. vii) VECV: H1 volume softer than expected due to extended monsoons, but H2 expected to improve on infra push and GST-led economic recovery. viii) Current plants running close to full capacity (~1.2mn units). Post debottlenecking, effective capacity to log at >1.35mn units, with the new module coming online.

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