Eicher Motors FY26 Annual Earnings Summary

Rare earth materials used in gear sensors and alternators caused production issues for performance platforms (Himalayan, Guerrilla) in Q1. Mitigation via alternative materials is underway but remains a risk.

Steel and aluminum prices have risen, impacting margins by ~30 bps net in Q1. Further headwinds expected in Q2, with uncertain duration and magnitude.

The Indian two-wheeler industry grew slower than expected in Q1, with 125cc+ segments not expanding. Royal Enfield's growth is coming from market share gains, which may be harder to sustain if the overall market remains weak.

Post-GST hike to 40%, 450cc and 650cc sales have slowed; recovery is slower for 450cc. Management is engaging with government for rate reduction.

Raw material costs increased ~40bps due to precious metals and aluminum alloys. Management is using value engineering to mitigate, but headwinds persist.

VECV's HD truck volumes grew only 3.5% in Q2, with industry growth impacted by rail freight migration and higher truck productivity. H2 recovery is uncertain.

Precious metals and aluminum costs remain elevated, with potential headwinds to gross margins despite value engineering efforts.

Post-GST tax increase, demand for >350cc models dropped sharply; recovery is slower than expected, especially for 450cc.

International markets face headwinds from pre-registration discounts in Europe and tariff uncertainties in the US, limiting near-term growth.

Bus volumes declined 3.3% YoY with 110bps market share loss due to lower institutional orders; competition gaining large tenders.