8 May 2015
1QCY15 Results Update | Sector:
Automobiles
Eicher Motors
BSE SENSEX
27,105
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val (INRm)/Vol ‘000
Free float (%)
S&P CNX
8,192
EIM IN
27.0
426.3/6.7
17,200/6,230
4/26/122
787/60
45.0
CMP: INR15,789
TP: INR18,211 (+15%)
Buy
VECV drags consolidated operating performance
Consolidated operating performance was below estimate due to weak performance
of VECV despite strong Royal Enfield (RE) performance. Consolidated EBITDA
margins at 14.3% (v/s est. 15%) improved 110bpb QoQ (+280bp YoY). Higher-than-
expected other income of INR337m (v/s est. INR259m) resulted in in-line PAT of
INR1.95b, a growth of 40% YoY (27% QoQ).
n
Royal Enfield performance in line with estimate:
Net realization grew by 4.7%
YoY (~3.7% QoQ), driving EBITDA margin expansion of ~250bp QoQ (+300bp
YoY) to 26.1% (v/s est. 25.5%). Lower-than-estimated other income restricted
PAT to INR2.1b (v/s est. ~INR2.26b), a growth of 33% YoY.
n
VECV’s weak realization and higher other expenses impact EBITDA margin:
VECV’s realizations declined by ~5.3% QoQ (+13.7 YoY) to ~INR1.47m (v/s est.
~INR1.5m). Further, higher other expenses restricted EBITDA margins to ~7.1%
(v/s est. ~9.2%), expanding by 130bp YoY (+20bp QoQ). Higher tax impacted
PAT, which stood at ~INR436m (v/s est. ~INR868m)—a 20% YoY growth.
n
Earnings call highlights:
a) RE waiting period of 4-5 months, b) it has already
converted over 150 dealers (of the existing ~400 dealers) to the new retail
format, and all stores (over 500 dealership) would be on the new retail format
by the end of CY15, c) Oragadam Phase-2 is expected to start from July 2015,
with paint shop and associated assembly line by the end of 3QCY15, and d) it
shipped ~3900 engines/long blocks under MDEP (up 50% YoY/QoQ).
n
Valuation and view:
We lower our CY15E/16E EPS by 7.1%/4.9% to
~INR385/662, respectively, to factor in for a) lower VECV volume, realizations,
higher depreciation and tax, and b) RE’s higher realization. EIM trades at
41x/23.8x CY15E/16E EPS. Maintain
Buy
with a target price of INR18,211 (CY16E
SOTP-based).
Financials & Valuation (INR Billion)
Y/E Dec
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (X)
2015E
127.5
18.7
10.4
385
69.5
1,156
36.9
38.9
41.0
13.7
2016E
180.3
32.1
17.9
662
72.1
1,757
45.5
52.7
23.8
9.0
2017E
215.9
39.6
22.7
839
26.7
2,529
39.2
47.3
18.8
6.2
Estimate change
TP change
Rating change
5-7%
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Jay Shah
(Jay.Shah@MotilalOswal.com); +91 22 3078 4701
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Eicher Motors
Consolidated performance operationally below estimate due to weak VECV
performance
n
n
n
n
Eicher Motors consolidated revenues grew 35% YoY (17.2% QoQ) to INR25.3b
(below est).
EBITDA margins at 14.3% were below est. (v/s est. 15%) due to weak
performance by VECV.
EBITDA grew 65% YoY (21% QoQ) to ~INR3.6b.
Higher than expected other income of INR337m (v/s est. INR259m), resulted in
PAT of INR1.95b (in-line with est.), growth of 40% YoY (27% QoQ).
Royal Enfield continued with its strong volume growth of 44% YoY (13% QoQ) to
~92k units.
Realization improved by 4.7% YoY (+3.7% QoQ) to INR 104.5k (v/s est
~INR102.5k), driven by price increase of ~6% (including ~4% for excise duty
increase).
Revenues grew 51.2% YoY (+16.1% QoQ) to INR9.6b (v/s est INR9.4b).
EBITDA margins came in higher than expected at 26.1% (v/s est ~25.5%) on
account of higher realization and lower RM cost at 57.1% (v/s est. 59.1%).
Other expenses continue to remain high at ~11.5% of sales (v/s ~12% in 4QCY14
v/s ~10.1% in 1QCY14).
Adj. PAT grew by 33% YoY (72% QoQ) to INR2.1b (v/s est ~INR2.26b), restricted
by lower than estimated other income.
Royal Enfield Realizations (INR)
Royal Enfield: Operating Performance above estimate
n
n
n
n
n
n
Exhibit 1: RE Net realization at all time high of INR 104.5k/unit
Source: Company, MOSL
Exhibit 2: Strong volume growth driven by production
ramp-up
Royal Enfield volumes (units)
56.6
48.6
Growth YoY %
83.585.1
72.4
69.9
68.2
60.6
49.244.4
48.149.7 45.345.5
40.8
Exhibit 3: Margins at all time high of 26.1%
Royal Enfield EBITDA margins %
17.8
18.6
25.0 26.1
24.9 23.6
13.0
12.8
15.3
9.2
13.9
13.3
36.2
28.4
11.5
17.7
15.1
19.3
23.1
Source: Company, MOSL
8 May 2015
Source: Company, MOSL
2

Eicher Motors
Exhibit 4: Standalone Quarterly Performance (Royal Enfield)
(INR Million)
Y/E December
Royal Enfield (units)
Growth (%)
Net Realizations
(INR/unit)
Change - QoQ (%)
Net Op Income
Growth (%)
RM Cost (%)
Staff Cost (%)
Other Exp (%)
EBITDA
EBITDA Margins (%)
Depreciation
Other income
Interest cost
PBT before EO item
Effective tax rate (%)
Recurring PAT
Growth (%)
E: MOSL Estimates
CY14
1Q
2Q
3Q
4Q
63,745 74,132 81,977 82,215
83.5
85.1
69.9
49.2
99,730 100,657 100,168 100,730
4.1
0.9
-0.5
0.6
6,357 7,462 8,212 8,282
90.5
95.4
78.9
56.9
61.3
59.4
59.1
59.1
5.5
5.4
5.1
5.3
10.1
10.2
10.8
12.0
1,468 1,861 2,052 1,955
23.1
24.9
25.0
23.6
109
115
128
149
849
135
128
51
11
1
1
5
2,197 1,881 2,051 1,852
26.9
29.1
31.3
33.0
1,606 1,332 1,410 1,241
65.2 153.2 128.2
85.2
CY15
CY14
CY15E
CY15
1Q
2QE
3QE 4QE
1QE Var (%)
0.0
92,021 105,754 118,254 133,412 302,591 449,441 92,021
44.4
42.7
44.3
62.3
69.9
48.5
44.4
104,450 104,295 104,287 104,281 100,175 104,320 102,520
1.9
3.7
-0.1
0.0
0.0
1.8
1.9
9,612 11,030 12,332 13,912 30,312 46,886 9,434
51.2
47.8
50.2
68.0
76.9
54.7
48.4
57.1
57.2
57.2
57.1
59.6
57.2
59.1 -200bp
30bp
5.3
4.8
4.5
4.2
5.3
4.6
4.9
11.5
11.2
11.2
11.6
10.9
11.4
10.5 100bp
4.5
2,512
2,960
3,347
3,756
7,336 12,575 2,403
26.1
26.8
27.1
27.0
24.2
26.8
25.5
20.0
191
206
246
263
502
906
159
-27.9
649
200
180
316
1,163
1,346
900
450.0
6
5
5
5
17
20
1
-5.7
2,965
2,949
3,276
3,805
7,980 12,995 3,143
0bp
28.0
28.0
28.0
28.0
30.0
28.0
28.0
-5.7
2,135
2,124
2,359
2,740
5,589
9,356 2,263
32.9
59.4
67.3
120.8
92.8
67.4
40.9
VECV (CV business): Operating performance below estimate
n
n
n
n
n
Volumes grew 9.7% YoY (15.7% QoQ) driven primarily by strong growth of ~11%
YoY HD (Goods) and exports showing growth of ~252% YoY. While underlying
market showing early signs of improvement.
Realizations declined ~5.3% QoQ (+13.7% YoY) to INR1.47m/unit (v/s est
~INR1.55m/unit), impacted by adverse mix and higher discounts.
Revenues grew ~25% YoY (9.6% QoQ) to INR16b (v/s est INR17b).
EBITDA margins were down 20bp QoQ (+130bp YoY) to 7.1% (v/s est of 9.2%)
impacted by higher discounts and higher other expenses.
Higher tax rate of 33.9% (v/s est 23.2%) further impacted PAT to INR436m (v/s
est INR868m) growth of 20% YoY (-23.4% QoQ).
Exhibit 6: Margins declined to 7.1% QoQ on higher discounts
Growth YoY %
11.5
10.1 9.7
9.2
7.6
10.1
5.8
6.2
8.0
7.6
5.6
5.9
6.6
5.8
6.9 7.3 7.1
VECV EBITDA margins %
Exhibit 5: Volume recovery continues
VECV volumes (units)
28.5 25.7
23.5
21.6
13.0
9.0
4.2 4.1
8.6 9.7
-20.3
-8.2 -25.4
-8.5
-12.6
-14.1 -12.7
Source: Company, MOSL
Source: Company, MOSL
8 May 2015
3

Eicher Motors
Exhibit 7: VECV: Quarterly (derived)
CY14
Y/E December
Total CV Volumes
Growth (%)
Net Realizations (INR
'000/unit)
Change - YoY (%)
Net Op Income
Growth (%)
RM Cost (%)
Staff Cost (%)
Other Exp (%)
EBITDA
EBITDA Margins (%)
Depreciation
Other income
Interest cost
PBT after EO item
Effective tax rate (%)
Recurring PAT
Growth (%)
1Q
2Q
9,981 11,495
-20.3
4.2
3Q
9,815
4.1
4QE
9,460
8.6
CY14
CY14E
1Q
2QE
3QE
4QE
10,949 13,218 14,631 14,637 40,751
9.7
15.0
49.1
54.7
-2.3
1,468 1,488 1,504 1,574 1,433
13.7
14.1
1.5
1.6
29.5
16,069 19,670 21,999 23,044 58,408
24.7
31.2
51.3
57.2
11.2
68.7
69.0
68.3
69.0 132.2
8.4
8.1
7.5
8.1
16.4
15.7
15.2
15.0
15.8
28.7
1,148 1,511 2,038 1,630 4,658
7.1
7.7
9.3
7.1
15.4
577
600
600
646 1,697
96
60
75
149
356
7
10
10
32
81
660
961 1,503 1,101 3,236
33.9
25.0
25.0
25.4
15.9
436
721 1,128
821 2,721
20.0
59.2 150.2
44.3
-34.2
CY15E
141,318
246.8
578
-48.3
81,712
39.9
118.5
13.8
26.6
7,257
15.5
2,423
380
58
5,156
21.7
4,036
48.3
(INR Million)
CY14
1QE Var (%)
10,949 0.0
9.7
1,555
20.5
17,026
32.1
68.5
8.1
14.3
1,562
9.2
475
100
30
1,157
25.0
868
138.8
-5.6
-5.6
20bp
30bp
150bp
-26.5
-200bp
21.4
-4.2
-77.3
-43.0
890bp
-49.8
1,291 1,304 1,481 1,549
16.3
11.7
14.1
17.2
12,885 14,992 14,538 14,656
-7.3
16.4
18.7
27.3
69.2
70.3
69.4
68.5
9.3
8.6
8.8
8.4
15.7
14.6
14.9
15.7
752
984 1,000 1,076
5.8
6.6
6.9
7.3
368
442
435
451
113
43
64
100
48
10
8
15
448
575
621
710
19.0
21.2
27.4
19.8
363
453
451
569
-52.4
-38.1
6.2
5.0
Key Takeaways from Con-Call
Royal Enfield
n
Order book currently at all time high levels, resulting in waiting period of 4-5
months.
n
Investing in two technology centre viz a) main centre at Chennai (to be ready by
2QCY16) and b) satellite centre at UK (by end of CY15).
n
It is working on two new platforms in 250cc-750cc range, which are planned for
launch in CY16/CY17 each.
n
Dealership:
Expects to end CY15 with close to 500 dealers, adding currently 6-8
dealers a month. It has already converted over 150 dealers to new retail format,
and by end of CY15 all stores (over 500 dealership) would be on new retail
format.
n
Oragadam Phase-2:
Paint-shop is expected to start from July 2015, whereas
new assembly line would start operation by end 3QCY15. In the interim, with
commissioning of pain-shop it would operate existing assembly line at 3 shifts,
till phase-2 starts.
n
Service quality:
RE has increased number of service bays by ~50% in CY14,
helping to significantly reduce waiting period for servicing. Similarly, it has
worked on improvement of availability of parts from central warehouse (now in-
line with global standards).
n
RE’s warranty frequency has halved over last 2 years.
n
Exports:
It is excited about its prospect in Columbia, where it has recently
opened up two flagship store in two biggest cities. Also, it has appointed dealers
in Australia, Spain and few other markets.
VECV
n
Full roll-out of Pro 6000/8000 series (HD) over 12-18 months time:
The
management indicated that initial response to Pro 6000/8000 series has been
very good. Customers are getting higher uptime (~2x), dramatically high fuel
8 May 2015
4

Eicher Motors
n
n
n
efficiency. Currently, it has only launched in handful of cities, with roll out in
other cities happening over next 12-18 months. Similarly, it has only launched
initial range of products and entire product range would be launched in next 12-
18 months.
Fleet operators are modernizing their fleets in anticipation of GST
implementation in FY17. It expects market would move towards modern, highly
efficient products over period of time.
MDEP:
In 1QCY15, it shipped ~3,900 engines/long blocks up 50% YoY/QoQ.
Tax rate:
Tax rate for CY16 to remain high at close to 30%.
Other takeaways
n
Polaris:
Product to be launched before end of current year.
n
Capex (CY15):
Royal Enfield - INR5b (incl R&D and frontend stores etc), and
VECV ~INR5b.
Valuation and view
n
n
n
RE volume momentum to further strengthen as focus shifts from production to
products:
Given its leadership position, cult brand equity and minimal
competition, RE is well positioned to benefit from improvement in consumer
sentiment and economic recovery. With confidence in managing capacities,
management’s focus has shifted to products and marketing process. It is now
focussing on expanding addressable market through new products and
expanding dealership (in sync with capacity expansion), at the same time
retaining aspirational value and brand ethos of RE. New models launch from
CY16/CY17 onwards. RE Exports scale-up to take 2-3 year, as it has just starting
work on its focus on Latin America and Asia. Added 100 dealers, would continue
to add 6-8 dealers/month. Every new dealership in new retail identity, and
working with existing dealer to shift to new format by CY15 (total of ~500 stores
by end of CY15). Acquired ~50 acres of land for new plant, which is being
planned for next round of capacity planning beyond CY16 (no plans to start work
in near future). This plant might have similar capacity as at Oragadam plant
(similar sized land). It would take 12 months from Day-Zero to start the plant.
We estimate 35%/47%/47% volumes/EBITDA/PAT CAGR over CY14-17E.
VECV well prepared for CV cycle recovery:
VECV recently launched its next
generation CVs developed with inputs from Volvo (including Volvo engine).
VECV expected to be key player to benefit from pick-up in Indian CV industry.
Globally, India is among the few markets where Volvo has low share. While Pro
series launch of LMD and HD range (big upgrade of existing platform) is largely
done. Pro series will help to ramp-up exports over next 2 years, with focus on
Africa and Asia. MDEP ramp-up continues with 12,000 units in CY14.We
estimate VECV’s sales/PAT to post 27%/78% CAGR (CY14-17E).
MDEP: An opportunity to be part of Volvo’s global supply chain:
MDEP holds
strategic importance for both the Volvo Group (low cost source of Euro 5/6
medium-duty engines) and VECV (improve VECV's positioning in HCVs with
headstart on futuristic technology). It provides an opportunity to be part of
Volvo’s global supply chain & tap other such opportunities.
8 May 2015
5

Eicher Motors
n
n
Cut our EPS estimate:
We lower our CY15E/16E EPS by 7.1%/4.9% to
~INR385/662 respectively, to factor in for a) lower VECV volume, realization,
higher depreciation and tax, and b) RE’s improving realization and margins.
Structural story gets stronger:
With several projects coming on stream in CY15-
17 driving 35% sales and 52% EBITDA CAGR over CY14-17E, EIM is at an
inflection point. EIM trades at 41x/23.8x CY15E/16E EPS. Maintain
Buy
with a
target price of INR18,211 (CY16E SOTP-based).
Exhibit 8: Revised forecast
(INR M)
Rev
Standalone (RE)
Volumes (units)
Net Sales
EBITDA
EBITDA (%)
Core Profit
Net Profit
EPS (INR)
VECV
Volumes (units)
Net Sales
EBITDA
EBITDA (%)
Core Profit
EPS (INR)
Consolidated
Net Sales
EBITDA (%)
Net Profit
EPS (INR)
127,460
14.7
10,430
384.9
132,942
15.3
11,232
414.5
(4.1)
-60bp
(7.1)
(7.1)
180,344
17.8
17,949
662.3
187,974
18.1
18,872
696.4
(4.1)
-30bp
(4.9)
(4.9)
215,934
18.3
22,740
839.1
224,392
17.6
22,598
(3.8)
80bp
0.6
53,433
80,782
6,327
7.8
2,726
62.3
56,105
86,862
8,706
10.0
4,574
104.7
(4.8)
(7.0)
(27.3)
-220bp
(40.4)
(40.4)
72,095
112,288
13,340
11.9
7,624
166.6
75,921
120,892
15,720
13.0
9,451
209.5
(5.0)
(7.1)
(15.1)
-110bp
(19.3)
(20.5)
84,279
131,315
16,480
12.6
9,543
214.6
88,764
141,015
17,119
12.1
9,940
228.4
(5.1)
(6.9)
(3.7)
40bp
(4.0)
(6.1)
449,441
46,886
12,575
26.8
8,273
9,356
345.3
449,441
46,297
11,861
25.6
7,816
9,020
332.8
-
1.3
6.0
120bp
5.9
3.7
3.7
628,284
68,349
19,005
27.8
12,669
14,189
523.6
628,284
67,388
18,530
27.5
12,341
13,963
515.2
-
1.4
2.6
30bp
2.7
1.6
1.6
755,154
84,970
23,422
27.6
15,512
17,820
657.6
755,154
83,742
22,632
27.0
14,958
17,317
639.0
-
1.5
3.5
50bp
3.7
2.9
2.9
CY15E
Old
Chg (%)
Rev
CY16E
Old
Chg (%)
Rev
CY17E
Old
Chg (%)
833.9
0.6
Source: Company, MOSL
Exhibit 9: SOTP Valuations
INR Mn
Royal Enfield
Core PAT (ex div & fin income)
Core Equity Value
@ 30x PE
Net Debt
Equity Value
VECV (@ 54.4% Economic interest)
EBITDA
EV
@ 10x EV/EBITDA
Net Debt
Equity Value
Total Equity Value
Target Price (INR/Sh)
Upside %
CY15E
8,273
248,201
-16,472
264,672
3,442
34,420
-2,591
37,011
301,683
11,132
-29%
CY16E
12,669
386,393
-29,087
415,480
CY17E
15,512
465,368
-44,648
510,017
7,257
8,965
72,571
89,653
-5,473
-9,890
78,044
99,543
493,524
609,560
18,211
22,493
15%
42%
Source: Company, MOSL
8 May 2015
6

Eicher Motors
Exhibit 10: Valuations trading above historical average, reflecting improving fundamentals
42
35
28
21
14
7
0
0.0
11.5
18.2
14.9
4.0
P/E (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
16.0
12.0
30.1
8.0
P/B (x)
5 Yrs Avg(x)
15 Yrs Avg(x)
10 Yrs Avg(x)
11.1
4.6
3.0
2.4
Source: MOSL
Source: MOSL
Exhibit 11: Comparative Valuation
Auto OEM's
Bajaj Auto
Hero MotoCorp
TVS Motor
M&M
Maruti Suzuki
Tata Motors
Ashok Leyland
Eicher Motors#
Auto Ancillaries
Bharat Forge
Exide Industries
Amara Raja Batteries
# Nos. are on CY basis
1,230
154
816
Buy
Buy
Buy
1,619
223
1,195
25.9
18.1
25.3
19.0
15.1
17.1
14.3
11.3
14.3
10.9
9.2
10.3
29.6
15.7
29.0
31.0
16.6
33.5
29.7
22.1
33.4
23.3
CMP *
(INR)
2,129
2,302
221
3,605
514
69
15,789
Rating
Buy
Buy
Buy
Buy
Buy
Buy
Buy
TP
(INR)
2,407
2,791
302
4,617
722
90
18,211
P/E (x)
FY16E
FY17E
17.0
16.2
20.0
16.1
20.1
7.3
18.8
41.0
14.2
13.2
12.8
12.7
15.6
6.3
11.1
23.8
EV/EBITDA (x)
FY16E
FY17E
11.3
11.1
12.3
14.1
10.4
3.0
9.3
23.9
9.2
9.2
8.2
11.9
8.5
2.3
5.9
14.4
RoE (%)
FY16E
FY17E
31.9
39.8
28.5
15.8
19.3
24.0
18.3
36.9
33.4
41.1
34.4
16.1
21.2
22.1
26.5
45.5
RoCE (%)
FY16E
FY17E
43.6
55.6
27.6
16.9
25.9
26.2
18.4
38.9
45.0
56.4
35.9
17.9
28.3
25.5
27.4
52.7
1,181 Neutral 1,246
40.9
45.4
Source: Company, MOSL
8 May 2015
7

Eicher Motors
Operating metrics
Exhibit 12: Snapshot of Revenue Model
000 units
ROYAL ENFIELD (S/A)
Total 2W (units)
Growth (%)
Net realn (INR'000/unit)
Growth (%)
RE Revenues (INR b)
Growth (%)
VECV
Dom - LMD
Growth (%)
% of CV Vols
Dom - HCV
Growth (%)
% of CV Vols
Total Dom.
Growth (%)
% of CV Vols
Exports
Growth (%)
% of CV Vols
Total CV vols
Growth (%)
MDEP Vols (Ex captive)
Net realn (INR'000/unit)
Growth (%)
VECV Revenues (INR b)
Growth (%)
Net Consol sales (INR b)
Growth (%)
CY11
75
41.9
89
7.1
50
26.8
37
19.9
77.1
8
81.9
16.5
45
27.5
93.6
3
14.4
6.4
48
26.6
1,029
2
50
26.8
57
29.5
CY12
113
52.0
92
3.0
53
5.9
36
-3.9
75.3
9
14.8
19.2
45
-0.6
94.5
3
-16.3
5.5
48
-1.6
1,111
8
53
5.9
64
11.6
CY13
178
57.0
95
2.7
51
-4.1
31
-13.3
76.1
7
-27.4
16.3
38
-16.1
92.3
3
20.1
7.7
41
-14.1
3
1,236
11
51
-4.1
68
6.6
CY14
303
69.9
100
5.4
58
12.3
28
-11.2
69.1
6
-2.4
16.3
34
-9.6
85.4
6
86.5
14.6
40
-2.3
12
1,412
14
58
12.3
87
28.3
CY15E
449
48.5
104
4.2
81
40.3
33
20.0
63.3
11
71.6
21.3
44
29.8
84.6
8
38.2
15.4
52
31.0
18
1,512
7
81
40.3
127
45.9
CY16E
628
39.8
108
4.2
112
39.0
42
27.4
59.9
16
47.6
23.4
59
32.5
83.3
12
46.3
16.7
70
34.6
25
1,558
3
112
39.0
180
41.5
CY17E
755
20.2
112
3.5
131
16.9
48
13.8
58.3
20
23.9
24.8
68
16.6
83.0
14
18.6
17.0
82
16.9
19
1,558
0
131
16.9
216
19.7
Source: Company, MOSL
8 May 2015
8

Eicher Motors
Eicher Motors| Story in charts: Multiple growth drivers
Exhibit 13: Capacity addition and healthy demand to drive RE Exhibit 14: …together with efficiencies of new plant to drive
volumes…
RE margins
Volumes (units)
69.9
57.0
48.5
19.0
39.8
20.2
Growth (%)
EBITDA
24.2
26.8
EBITDA Margins (%)27.8
27.6
CY13
CY14
CY15E
CY16E
CY17E
CY13
CY14
CY15E
CY16E
CY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 15: VECV recovery expected to get stronger in CY15
VECV (units)
31.0
16.9
(2.3)
(14.1)
CY13
CY14
CY15E
CY16E
CY17E
Growth YoY %
34.6
Exhibit 16: Improved demand, lower discounts to drive VECV
margins
EBITDA (INR m)
EBITDA (%)
11.9
7.7
6.7
7.8
12.6
CY13
CY14
CY15E
CY16E
CY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 17: Royal Enfield contributed ~78% of CY14 EBITDA
Royal Enfield
0
22
VECV (ex-MDEP)
1
1
21
26
MDEP
0
28
Exhibit 18: Robust growth to drive ROE and RoCE
RoE
RoCE
52.7
45.5
47.3
39.2
44
36.9 38.9
60
(4)
CY13
CY14
CY15E
CY16E
CY17E
2013
2014
2015E
78
79
72
72
20.7 21.8
26.9 27.6
2016E
2017E
Source: Company, MOSL
Source: Company, MOSL
8 May 2015
9

Eicher Motors
Financials and valuations
Income Statement (Consolidated)
Y/E December
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
Interest cost
Other Income
PBT
Tax
Effective Rate (%)
PAT
Change (%)
Less: Minority Interest
Adj. PAT
Change (%)
2010
43,971
49.6
3,811
8.6
573
95
1,034
4,177
1,108
26.5
3,068
137.0
1,179.3
1,889
126.6
2011
56,775
29.1
6,037
10.5
640
77
1,281
6,602
1,628
24.7
4,974
62.1
1,886.3
3,088
63.4
2012
63,299
11.5
5,490
8.6
822
38
1,366
5,997
1,249
20.8
4,749
-4.5
1,505.9
3,243
5.0
2013
66,858
5.6
7,137
10.5
1,300
79
953
6,711
1,452
21.6
5,259
10.8
1,314.4
3,945
21.7
2014
85,987
28.6
11,148
12.8
2,198
98
1,074
9,926
2,909
29.3
7,017
33.4
863.8
6,154
56.0
2015E
125,769
46.3
18,695
14.7
3,329
78
1,318
16,605
4,758
28.7
11,847
68.8
1,416.3
10,430
69.5
2016E
177,275
41.0
32,052
17.8
4,101
78
2,145
30,018
8,285
27.6
21,734
83.5
3,784.5
17,949
72.1
(INR Million)
2017E
212,390
19.8
39,551
18.3
4,961
78
3,595
38,106
10,493
27.5
27,613
27.1
4,873.9
22,740
26.7
Balance Sheet (Consolidated)
Y/E December
Share Capital
Net Worth
Minority Interest
Deferred Tax
Loans
Capital Employed
Application of Funds
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
- of which Goodwill
Investments
Curr.Assets, L & Adv.
Inventory
Sundry Debtors
Cash & Bank Balances
Loans & Advances
Others
Current Liab. & Prov.
Sundry Creditors
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates
2010
269
12,321
6,774
249
956
20,301
8,113
4,269
3,844
703
223
4,586
20,500
3,265
2,609
12,457
1,814
355
9,332
7,596
346
1,391
11,168
20,301
2011
270
14,931
8,377
645
504
24,456
9,887
4,843
5,044
4,128
223
5,126
23,501
4,280
3,434
11,973
3,391
424
13,343
11,238
608
1,497
10,157
24,456
2012
270
17,549
9,485
1,232
384
28,649
15,260
5,342
9,918
5,044
223
6,385
23,368
4,888
4,459
8,035
5,503
483
16,066
14,356
6
1,704
7,302
28,649
2013
270
20,554
10,397
1,805
839
33,595
22,993
6,431
16,561
4,636
223
8,255
23,914
5,268
5,125
6,826
6,163
532
19,771
17,612
0
2,159
4,143
33,595
2014
271
25,159
10,851
2,394
584
38,986
31,374
8,280
23,093
4,188
223
10,777
26,018
6,455
5,622
4,806
8,578
557
25,089
21,876
0
3,213
928
38,987
2015E
271
31,334
12,267
2,650
584
46,835
43,243
11,610
31,634
1,250
223
9,171
35,732
9,298
5,743
12,646
7,124
921
30,952
22,992
4,553
3,407
4,780
46,835
2016E
271
47,627
16,051
3,179
584
67,441
53,243
15,710
37,533
1,250
223
9,171
62,903
13,141
8,005
30,561
9,898
1,297
43,416
32,543
6,607
4,266
19,487
67,441
(INR Million)
2017E
271
68,522
20,925
3,854
584
93,886
63,493
20,671
42,822
1,250
223
9,171
92,747
15,713
9,396
54,241
11,851
1,545
52,103
38,982
8,169
4,952
40,643
93,886
8 May 2015
10

Eicher Motors
Financials and valuations
Ratios (Consolidated)
Y/E December
Basic (INR)
EPS
EPS Growth (%)
Cash EPS
Book Value per Share
DPS
Payout (Incl. Div. Tax) %
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price to Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors (Days)
Working Capital (Days)
Asset Turnover (x)
Fixed Asset Turnover
Leverage Ratio
Debt/Equity (x)
2010
70.1
6.5
91.4
457.4
11.0
18.3
225.2
172.8
181.7
15.9
34.5
0.1
16.4
22.4
2011
114.4
63.1
138.1
553.2
16.0
16.3
138.0
114.3
115.7
12.1
28.5
0.1
22.7
29.8
2012
120.1
5.0
150.5
650.0
20.0
19.5
131.5
104.9
114.6
10.5
24.3
0.1
20.0
22.7
2013
145.9
21.5
194.0
760.1
30.0
24.1
108.2
81.4
76.8
9.2
20.8
0.2
20.7
21.8
2014
227.1
55.6
308.2
928.4
35.0
27.5
69.5
51.2
44.2
6.8
17.0
0.2
26.9
27.6
2015E
384.9
69.5
507.7
1,156.2
40.0
12.2
41.0
31.1
25.5
4.5
13.7
0.3
36.9
38.9
2016E
662.3
72.1
813.7
1,757.4
45.0
7.9
23.8
19.4
15.0
3.0
9.0
0.3
45.5
52.7
2017E
839.1
26.7
1,022.2
2,528.5
50.0
7.0
18.8
15.4
11.5
2.4
6.2
0.3
39.2
47.3
22
27
63
-14
2.2
22
27
72
-22
2.3
25
28
82
-29
2.2
27
28
94
-39
2.0
23
27
91
-41
2.2
16
27
66
-23
2.7
16
27
66
-23
2.6
16
27
66
-23
2.3
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Cash Flow Statement (Consolidated)
Y/E December
Profit before Tax
Depreciation & Amort.
Direct Taxes Paid
(Inc)/Dec in Working Capital
Interest/Div. Received
Other Items
CF from Oper. Activity
(Inc)/Dec in FA+CWIP
Free Cash Flow
(Pur)/Sale of Invest.
CF from Inv. Activity
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividends Paid
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
2010
4,177
573
-831
374
1,039
-933
4,399
-1,315
3,084
-1,645
-2,960
88
-307
-118
-351
-689
750
11,707
12,457
2011
6,602
640
-1,668
-234
1,316
-1,305
5,351
-4,173
1,178
-540
-4,713
24
-453
-84
-609
-1,122
-484
12,457
11,973
0
2012
5,997
822
-1,077
391
1,351
-1,308
6,177
-7,820
-1,644
-1,263
-9,083
4
-43
-40
-895
-974
-3,880
11,915
8,035
0
2013
6,706
1,300
-1,504
1,491
1,023
-819
8,197
-7,054
1,143
-1,879
-8,933
17
610
-80
-1,020
-474
-1,209
8,035
6,826
0
2014
9,926
2,198
-2,810
2,020
950
-1,809
10,475
-9,682
793
-1,190
-10,872
79
-255
-98
-1,348
-1,622
-2,020
6,826
4,806
0
2015E
16,605
3,329
-4,502
-1,848
1,318
4,598
19,500
-8,932
10,568
1,606
-7,326
-2,987
0
-78
-1,268
-4,333
7,841
4,806
12,647
0
(INR Million)
2016E
30,018
4,101
-7,756
3,445
2,145
-2,303
29,650
-10,000
19,650
0
-10,000
-230
0
-78
-1,427
-1,735
17,915
12,647
30,562
0
2017E
38,106
4,961
-9,818
2,476
3,595
-3,470
35,852
-10,250
25,602
0
-10,250
-259
0
-78
-1,585
-1,922
23,679
30,562
54,241
0
8 May 2015
11

Eicher Motors
Corporate profile: Eicher Motors
Company description
Promoted by the Delhi-based Vikram Lal Group,
Eicher Motors (EIM) is a diversified engineering
company. It is engaged in the business of high end
motorcycles (350cc & above) under the brand
'Royal Enfield', and commercial vehicles (CVs),
automotive gears and components, and
engineering solutions through its subsidiary, Volvo
Eicher Commercial Vehicles (VECV).
Exhibit 18: Sensex rebased
Exhibit 20: Shareholding pattern (%)
Mar-15
Promoter
DII
FII
Others
55.0
6.1
22.1
16.9
Dec-14
55.0
4.7
19.5
20.9
Mar-14
55.1
5.3
19.6
20.0
Exhibit 21: Top holders
Holder Name
Aktiebolaget Volvo
Cartica Capital Ltd
Tiaa- Cref Institutional Mutual Funds International
Amansa Capital Pte Ltd A/c Amansa Holdings Pvt Ltd
Tree Line Asia Master Fund (Singapore) PTE Ltd
% Holding
3.7
3.3
1.3
1.3
1.1
Note: FII Includes depository receipts
Exhibit 22: Top management
Name
S Sandilya
Siddhartha Lal
Lalit Malik
B Govindarajan
Vinod Aggarwal
Designation
Chairman
Managing Director & CEO
CFO, EML
COO, Royal Enfield
CEO, VECV
Exhibit 23: Directors
Name
S Sandilya
Siddhartha Lal
Priya Brat*
M J Subbaiah*
*Independent
Name
Prateek Jalan*
Manvi Sinha*
Exhibit 24: Auditors
Name
Deloitte Haskins & Sells LLP
V Kalyanaraman
Type
Statutory
Cost Auditor
Exhibit 25: MOSL forecast v/s consensus
EPS
(INR)
CY15
CY16
CY17
MOSL
forecast
384.9
662.3
839.1
Consensus
forecast
389.1
612.9
818.9
Variation
(%)
-1.1
8.1
2.5
8 May 2015
12

Eicher Motors
NOTES
8 May 2015
13

Eicher Motors
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