The Royal Enfield motorcycle brand has been around for more than 100 years and is one of the most popular motorcycle brands in India. It has also been growing in popularity in other countries.
The share price of Royal Enfield, which is owned by Eicher Motors and trades under the “EICHERMOT” ticker, has been on a tear in recent years. Since hitting a low at the start of the COVID-19 pandemic, the stock has risen 180% so far. This is due to a number of factors, including strong sales growth, a growing brand image, and a favorable valuation.
In this article, we will take a closer look at the Royal Enfield’s share price, company history, its financials, analyst calls, products and competitors to analyse whether it’s the right time to buy the stock.
Company History
Royal Enfield, known for the design and original production of the longest-lived motorcycle design in history, the Royal Enfield Bullet, built its first motorcycle in 1901.
The company’s history traces back to 1851 when George Townsend started a business making sewing needles. The business later diversified into components for cycle manufacturers, eventually evolving into the Eadie Manufacturing Company Limited.
Eadie won contracts to supply precision parts for firearms to the Royal Small Arms Factory at Enfield, assuming the brand name Royal Enfield.
The company then diversified into motorcycles and motor cars. In 1955, the Enfield Cycle Company partnered with Madras Motors in India, forming Enfield of India, and started assembling the 350cc Royal Enfield Bullet motorcycle in Madras. By 1962, all components were made in India. In 1994, the Eicher Group acquired Enfield India.
Eicher Motors, the parent firm of Royal Enfield, also holds diversified interests in making trucks, buses, engineering components and automotive gears.
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Royal Enfield Financials
Royal Enfield’s revenue and profit numbers have been growing steadily for the last four quarters, which have helped prop up the Royal Enfield share price. the firm’s operating profit margins have also held steady.
| Indicator (Quarterly) | Mar-2023 | Dec-2022 | Sep-2022 | Jun-2022 | Mar-2022 |
| Total Revenue (crores) | 4,009.80 | 3,913.30 | 3,668 | 3,446.10 | 3,311.30 |
| Operating Profit (crores) | 933.6 | 857.2 | 821.6 | 831.1 | 757 |
| Operating Profit Margin % | 24.54% | 23.04% | 23.35% | 24.46% | 23.71% |
| Net Profit (crores) | 905.6 | 740.8 | 656.9 | 610.7 | 610.1 |
| Basic EPS (₹) | 33.1 | 27.1 | 24 | 22.3 | 22.3 |
What’s Royal Enfield Share Price And Is It Time To Buy?
Royal Enfield share price ended at 3,558.60 at the close of trading on June 22, 2023. Royal Enfield shares have gained 10% so far in 2023.
However, Royal Enfield share price has dipped 1.57% in June so far.
You can check the current Royal Enfield share price by searching for EICHERMOT share price via any search engine.
Whether or not it is time to buy Royal Enfield shares depends on your individual investment goals and risk tolerance. The company’s strong financials, popular products, and growing brand image make it an attractive investment for many investors.
That said, we will now look at analyst calls, products, competitors and financial ratios to help you decide whether you should invest in Royal Enfield shares.
Analyst Calls On Royal Enfield Share Price
Most brokerages have raised the target price on Eicher Motors’ stock and maintained a “buy” rating on Royal Enfield share price after the company posted strong numbers in its latest quarterly result in May. Here are the ratings by various research firms:
| Brokerage Firm | Rating | Target Price (INR) |
|---|---|---|
| Goldman Sachs | Buy | 3,990 |
| CLSA | Buy | 4,266 |
| JP Morgan | Neutral | 3,620 |
| Jefferies | Buy | 4,000 |
| Citi | Buy | 4,800 |
| Morgan Stanley | Equal-weight | 3,553 |
Royal Enfield Products
Royal Enfield motorcycles come in a wide selection. These are the most popular:
- Royal Enfield Bullet: The Bullet series is one of the oldest running models and has been in continuous production since 1931. The Bullet 500, with its 499cc engine, was the model with the largest displacement engine in India at the time.
- Royal Enfield Classic: The Classic series is inspired by the post-war design of the 1950s, with a 500 cc UCE featuring electronic fuel injection. These models are known for their vintage aesthetic.
- Royal Enfield Thunderbird: The Thunderbird series was introduced in 2002. It is a cruiser-style motorcycle, and later models include LED lighting and digital gauges.
- Royal Enfield Continental GT and Interceptor: These models were introduced in 2018 and are known as the 650 twins. They are the most modern motorcycles in the Royal Enfield portfolio, reflecting a design shift towards a more global, contemporary aesthetic.
Royal Enfield Competitors
The main competitors of Royal Enfield are Bajaj Auto, TVS Motor and Hero MotoCorp. Bajaj Auto is the largest motorcycle manufacturer in India, Eicher Motors is the second-largest, Hero MotoCorp is the third-largest and TVS is the fourth-largest. All three competitors offer a range of motorcycles that compete with Royal Enfield’s products.
Bajaj Auto’s range of motorcycle include the Pulsar, Dominar and Avenger. Bajaj Auto also has a strong brand image in India.
Hero MotoCorp’s products include the Splendor, Passion and Glamour. Hero MotoCorp also has a strong brand image in India.
TVS Motor’s motorcycles include Apache, Radeon and Sport
Royal Enfield Comparison With Peers
Royal Enfield is the second-largest motorcycle firm by market cap, while Bajaj Auto is the biggest. All relevant Royal Enfield financial ratios are presented in the table below alongside its competitors.
| COMPANY | Market cap (Cr) | P/B | P/E | EPS (₹) | ROE % | ROCE % | EV/EBITDA |
| Bajaj Auto | 1.30 lakh | 5.14 | 23.2 | 198.89 | 19.37 | 25 | 16.85 |
| Eicher Motors | 97,000 | 7.52 | 36.94 | 95.83 | 15.57 | 20.7 | 23.42 |
| TVS Motor | 62,000 | 10.22 | 41.45 | 31.38 | 19.87 | 22.89 | 22.83 |
| Hero MotoCorp | 56,000 | 3.34 | 19.16 | 145.64 | 15.99 | 21.15 | 12.36 |
Royal Enfield has a relatively high price-to-earnings ratio, only behind TVS Motor. This suggests that Royal Enfield shares are trading at a premium valuation. Meanwhile, Royal Enfield’s return on equity and return on capital employed lag behind its competitors.
Please note that conducting thorough research is essential before investing in Royal Enfield shares. Assess Royal Enfield’s financials, industry trends, and potential risks. Seek advice from professionals before investing.
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