Despite the auto industry going through a cyclical slowdown, a leadership position in the premium bikes segment (>250 cc bikes) and an improving dealer penetration in the commercial vehicles space has come to the rescue of Eicher Motors. For the April-December 2011 period, its two-wheeler volumes (Royal Enfield) grew by 44 per cent.

Overall sales in the commercial vehicles segment too recorded a healthy 26 per cent rise. Aided by strong volume growth and better realisations, for the nine months ended September 2011, consolidated net sales grew by 30 per cent to Rs 4,109.5 crore and net profits, by 66 per cent to Rs 223 crore.

While the company currently enjoys about 35 per cent market share in light and medium commercial vehicles (up to 12 tonne trucks), with the catching on of the hub and spoke model, Eicher is now focusing on sprucing up its heavy vehicles portfolio. From less than five per cent market share in this segment, it hopes to increase it to 15 per cent by 2015. Towards this end, the company is expanding capacity for commercial vehicles. It is also setting up an engine plant with Volvo, which would become operational by mid-2013.

Going forward, strong demand, stable raw material prices and a richer product mix is expected to aid earnings growth.

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