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14 Feb 2022

Eicher Motors Q3 Revenue May Increase 3-7%

By News Date 14 Feb 2022

Eicher Motors Q3 Revenue May Increase 3-7%

Eicher will report a 3-8% year-on-year decline in its PAT (Profit After Tax) due to lower volumes and raw materials inflation. 

Eicher Motors Pvt Ltd, one of the major manufacturers of trucks, will announce its results for the Q3 ended December 2021. 

Experts believe that the company will report a 3-8% year-on-year decline in its PAT (Profit After Tax) due to lower volumes and raw materials inflation. 

Eicher had recorded a consolidated PAT of Rs 532.6 crore during Q3 ended December 2020 on consolidated revenues of Rs 2,828 crore. 

In the previous quarter of the current financial year, the PAT was Rs 373.2 crore, and the revenue was recorded at Rs 2,250 crore.

Brokerage Expectations

Kotak Institutional Equities expects a growth of 2.8% in operating revenue of Rs 2,907 crore, a growth of 29% on a sequential basis. 

The brokerage said in a report, "We expect revenues to grow by 3% YoY in Q3 financial year 2022 led by 21% YoY growth in ASPs (average selling price) because of price hikes and richer model mix undertaken over the past few quarters, partly by 15% annual fall in volumes." 

EBITDA (earnings before interest, tax, depreciation and amortization) is likely to fall 7.1% on year to Rs 624 crore from Rs 672 crore during the same quarter previous year. However, the EBITDA is expected to jump 33% on a sequential basis.

Kotak said, "We estimate EBITDA margin to grow by 110 bps QoQ led by 50 bps QoQ growth in gross margin led by price rise taken during the quarter and fall in precious metal prices and also due to operating leverage benefit. 
Annually, the EBITDA margins may fall by 229 bps because of lower volumes and higher raw materials. In the last quarter, the company had reported a one-time benefit of Rs 40 crore in employee costs related to unutilized ESOPs. 

The brokerage expects the PAT to fall 8.2% on year to Rs 489 crore and better 31% than last quarter. 

Brokerage firm Motilal Oswal has forecast operating revenue of Rs 3,037 crore with a year-on-year growth of 7.4% and a sequential growth of 35%. 

Motilal Oswal said in its report, "Semiconductors' availability for ABS (anti-lock braking system) helps recovery in volumes towards the end of the reported quarter. VECV (Volvo-Eicher Commercial Vehicles) volumes increase

QoQ, but cost inflation and higher discounts to keep margin in check."

It expects an EBITDA of Rs 647 crore for the quarter, a fall of 3.7% from last year but an increment of 38% from the last quarter. The EBITDA margins of 21.3% for the quarter may fall by 250 bps from the previous year but improve 30 bps QoQ. 

Motilal Oswal added that despite operating leverage, the improvement in QoQ margin is just 30 bps. There was a gain of 140 bps in the second quarter of the current fiscal on the reversal of the ESOP charge. 
It expects the decline of PAT by 3% on year to Rs 517 crore. On a sequential basis, this is an increment of 39%. 

Axis Securities expects "Y-o-Y to rise 4% as volumes fall by 15% will more than be offset by ASP (+22% YoY), while on a QoQ basis, ASP will be 5% on weak mix (less exports and parts, more bullet volume)."

On a sequential basis, it estimates the gross margin to likely be flat because of price rise, but operating leverage gains to drive a 200 bps improvement in margins. EBITDA margin may fall by 100 bps from last year's level on a year-on-year basis, primarily due to the normalization of other expenses.

It expects PAT to remain flat at Rs 530 crore on a year-on-year basis, a growth of 43% on a QoQ basis.

Eicher Motors stock closed at Rs 2,598.15, falling Rs 42.2 from the  National Stock Exchange's previous close on February 11. The stock is trading with a decline of 7% during the last year and the last month.

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