Eicher Motors posts profit below forecasts as input costs climb

what happened

Eicher Motors, the Indian carmaker, came in below quarterly profit forecasts on Friday, according to Reuters. Higher input prices absorbed the benefit of robust motorcycle demand and held back the bottom line.

Consolidated net profit climbed 15% to 15.73 billion rupees ($167.08 million) in the quarter that ended September 30, up from 13.69 billion rupees a year earlier. Analysts polled by LSEG had expected 16.26 billion rupees.

Revenue rose 20.3% to 74.22 billion rupees, topping the 73.46 billion rupee estimate. Domestic two-wheeler volumes grew more than 16% in the July-September period, ahead of the industry's 15.2% expansion per SIAM data, while exports increased 12.3%. Expenses rose nearly 22%. Earlier this year the company lifted Royal Enfield motorcycle prices by 1.75% to offset costlier steel and copper, which the Middle East conflict pushed higher.

why it matters

For investors this points to margin pressure across Indian carmakers, as input costs are rising faster than companies can pass them on through price increases. Demand remains solid, so the sector's share performance may hinge on whether manufacturers can protect profitability in coming quarters.

market impact

Eicher Motors and Indian auto sector: rising steel and copper costs pressure margins

• ▼Eicher Motors shares pressure down — profit below consensus weighs on investor sentiment
• ▼Indian auto sector pressure down — costlier steel and copper squeeze manufacturers' margins

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