Eicher Motors Q3 Profit Rises, Yet Shares Plunge 7% – 3 Reasons Why

Eicher Motors, the renowned manufacturer behind the iconic Royal Enfield motorcycles, recently released its third-quarter financial results for the fiscal year 2025. While the company showcased notable growth in both net profit and revenue, the market’s reaction was negative, leading to a drop in its share price. 

Eicher Motors’ shares fell 7.07% to an intraday low of ₹4,957.75 on February 11, 2025, after Goldman Sachs lowered its target price to ₹5,900. However, other factors also contributed to the market reaction, which we will explore in detail.

Source: LiveMint

Source: NSE

Eicher Motor’s Financial Highlights for Q3 FY25

Eicher Motors reported an 18% year-on-year increase in consolidated net profit to ₹1,171 crore for Q3, with revenue climbing 19% to ₹4,973 crore. 

Market Cap in Crore as of 11.02.25	CMP	PE Ratio	ROCE %	ROE %	Revenue for Q3FY25	Profit for Q3FY25
₹1,37,516	₹5,016	33.3	34.5	26.2	₹1,171 crore	₹4,973 crore

Source: Screener/economictimes.indiatimes.com

This growth can be attributed to the strong performance of its flagship brand, Royal Enfield, which achieved record sales during this period. The brand sold 269,039 motorcycles in the quarter, setting a new benchmark for quarterly sales – a 17% rise from the 229,214 motorcycles sold in Q3 FY24.

Source: economictimes.indiatimes.com/LiveMint

VECV Reports Strong Growth Despite Industry Slowdown

The VE Commercial Vehicles (VECV) segment recorded a 6% year-on-year rise in revenue, reaching ₹5,801 crore. Its EBITDA grew by 16% to ₹509 crore, while profit after tax saw a significant 44% jump to ₹301 crore.

VECV also achieved its highest-ever quarterly sales, selling 21,012 vehicles in Q3 FY25, surpassing the 20,706 units sold in the same period last year. The company highlighted its strong performance, noting that its commercial vehicle business gained market share despite sluggish industry trends.

Source: LiveMint

Despite solid revenue and profit growth in Q3 FY25, Eicher Motors’ shares took a hit. Let’s explore the key factors behind the price decline.

3 Key Reasons Behind Eicher Motors’ Share Price Drop

• Goldman Sachs Lowers Target Price

Goldman Sachs maintained its ‘Buy’ rating on Eicher Motors but reduced its target price from ₹6,000 to ₹5,900, still indicating a 12.5% upside from the previous close. The brokerage noted that while Q3 results aligned with expectations, higher marketing costs and regulatory price hikes weighed on future earnings. Additionally, Goldman Sachs lowered its FY25-27 EPS estimates by 5.4%, citing increased expenses.

Source: LiveMint

• Profit Missed Analyst Estimates

Despite an 18% year-on-year increase in net profit to ₹1,171 crore, Eicher Motors fell short of analysts’ expectations, who had projected around ₹1,212 crore. The miss was attributed to rising marketing costs and a shift in sales mix, with lower-margin motorcycle models contributing more to revenue than premium ones.

 reuters.com

• Higher Marketing Expenses Impact Margins

Eicher Motors ramped up its marketing efforts to strengthen its market position and boost sales. While this strategy helped enhance brand visibility, it also led to higher expenses, ultimately affecting profitability.

Analysts Perspectives

The mixed signals from Eicher Motors’ financial performance have led to varied opinions among analysts. While the company has showcased strong growth in sales and revenue, the increased costs and shift in sales mix have raised concerns about its profitability trajectory. 

Goldman Sachs’ decision to lower the target price reflects caution, emphasizing the need for the company to manage its expenses and focus on higher-margin products to sustain investor confidence.

Looking Ahead

Eicher Motors faces a crucial phase where managing rising costs and changing consumer trends will shape its future. The company’s focus on optimizing its product mix, controlling expenses, and leveraging Royal Enfield’s strong brand will be key. Investors will be watching how it balances growth with profitability.

In summary, while Eicher Motors has shown strong growth in some areas, the recent market reaction highlights the need for smart financial management and aligning strategies with investor expectations.

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