That Royal Enfield is “made like a gun” is in its tagline. Now, the world's oldest motorcycle brand in continuous production has new “growth bullets” at play.
“Comebacks are stronger than setbacks,” BofA Securities said in a note dated March 4. “We think Royal Enfield is a rare pocket of growth in an otherwise slowing auto market.”
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Sales of the Bullet maker rose for the third straight month in February — up 19% year-on-year to 90,670 units — as demand for the breadwinner Bullet and Classic models returned.
Up to 350 cc sales up 17% YoY at 77,775 units.
Above 350 cc sales up 33% YoY at 12,895 units.
Exports up 23% YoY at 9,871 units.
According to BofA Securities, the growth rebound in Royal Enfield is here to stay due to the following factors:
The model line-up is being rejuvenated to bring back the “legacy” appeal, while continuing with upgrades and new colourways.
The value proposition of motorcycles at the sweet spot of Rs 2 lakh has become sweeter with added features.
Targeting marketing campaigns—online and offline—are a departure from the previous “no ads” philosophy.
Financing—lower down payments and longer loan tenures—has brought buyers to showrooms.
“All of this has brought back volume growth into the high teens and market share is expanding after a long time,” BofA Securities said. “We reiterate a ‘buy' on Eicher Motors Ltd. with a target price of Rs 6,000, as we see an upside to both valuation multiples and earnings.”
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