Eicher Motors roars past Q1 profit estimates on strong sales of pricier REs

India's Eicher Motors, which makes the Royal Enfield line of motorcycles, reported a bigger-than-expected first-quarter profit on Thursday, helped by strong sales of higher-margin models such as the Himalayan 450. The company's profit rose almost 20% year-on-year to 11.01 billion rupees ($131.2 million) in the April-June quarter, beating analysts' average estimate of 10.14 billion rupees, as per LSEG data.

Eicher clocked record-high sales in the previous two fiscal years due to strong demand from urban consumers, its key demographic. But demand has begun to peter off due to various factors, including rising competition and persistently high inflation.

Still, domestic sales of Royal Enfield's models with an engine capacity of more than 350cc, such as the Interceptor 650, jumped 29% in the quarter, according to previously released monthly data.

These higher-margin motorcycles accounted for roughly 14% of sales, up from 11.1% last year.

That helped counter the roughly 4% drop in domestic sales of the company's sub-350cc models, such as the Hunter 350, which accounted for roughly 85% of overall sales.

Overall revenue from operations, which includes sales of commercial vehicles such as trucks, rose more than 10% to 43.93 billion rupees, topping analysts' estimate of 42. 38 billion rupees.

Royal Enfields are the market leader among India's premium motorcycles, but its lead is being eaten into by Triumph, which has partnered with Bajaj Auto in India, as well as Harley Davidson, whose local partner is the country's No.1 two-wheeler company, Hero MotoCorp.

Bajaj Auto also beat profit estimates for the quarter, also helped by sales of higher-margin vehicles. Hero MotoCorp is due to report results next week.

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