💰 Financial Performance

Revenue Growth by Segment

EML Consolidated revenue reached its best-ever at INR 6,172 Cr in Q2 FY26, growing 45% YoY from INR 4,263 Cr. VE Commercial Vehicles (VECV) standalone revenue stood at INR 6,106 Cr in Q2 FY26, up 10.2% from INR 5,538 Cr, while H1 FY26 revenue grew 11% to INR 11,777 Cr.

Geographic Revenue Split

The company remains exposed to geographic concentration risk with approximately 89% of its revenues emanating from the domestic Indian market as of FY24. International markets contribute the remaining 11%, though exports for Royal Enfield saw a 49% YoY volume increase in the 7M FY26 period.

Profitability Margins

EML Consolidated EBITDA for Q2 FY26 was INR 1,512 Cr with a margin of 24.5%, compared to INR 1,088 Cr (25.5% margin) in Q2 FY25. VECV improved its EBITDA margin to 8% (INR 479 Cr) in Q2 FY26 from 7.3% (INR 395 Cr) in the previous year. Consolidated PAT grew 25% to INR 1,369 Cr in Q2 FY26.

EBITDA Margin

EML's consolidated EBITDA margin stood at 24.5% in Q2 FY26, a slight compression from 25.5% YoY due to higher operating and marketing expenses. VECV's EBITDA margin improved by 70 bps to 8% in Q2 FY26, driven by higher volumes and product excellence.

Capital Expenditure

EML maintains a robust liquidity profile with cash and investments of INR 17,700 Cr as of September 30, 2025. The company plans to fund all future capacity expansions and new product developments entirely through internal accruals, as it has done historically.

Credit Rating & Borrowing

EML maintains a robust financial risk profile with a negative net-debt position. Total debt stood at a minimal INR 446 Cr as of September 30, 2025. ICRA ratings reflect healthy profitability with RoCE at approximately 28% in H1 FY26.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include steel, aluminum, and rubber components. For the VECV segment, the cost of raw materials and components consumed was INR 7,543.9 Cr in H1 FY26, representing 64.05% of its total revenue.

Capacity Expansion

VECV recorded its highest-ever second-quarter sales of 21,901 units in Q2 FY26, exceeding the previous record of 20,774 units. Royal Enfield continues to scale up production for new models like the Guerrilla 450 to meet robust festive demand.

Raw Material Costs

VECV raw material costs stood at INR 7,543.9 Cr for H1 FY26, which is 64.05% of revenue. The company uses timely price interventions to manage inflationary pressures on raw materials.

Manufacturing Efficiency

VECV improved its PAT margin to 4.2% in Q2 FY26 from 3.8% YoY. Royal Enfield's manufacturing efficiency is supported by a busy launch calendar and refreshes that strengthen the product lineup.

📈 Strategic Growth

Expected Growth Rate

45%

Growth Strategy

Growth is driven by a robust product pipeline including the Guerrilla 450 and Eicher Pro X electric trucks, expansion into 70 international markets with 5 global assembly operations, and aggressive community building through events like Motoverse to deepen brand strength.

Products & Services

Premium motorcycles (>250cc), light to heavy-duty trucks (Eicher and Volvo brands), buses, and electric trucks (Eicher Pro X).

Brand Portfolio

Royal Enfield, Eicher, Volvo (JV), Motoverse, HunterHood, Guerrilla, Classic, Hunter.

New Products/Services

Recent launches include the Guerrilla 450 and the Eicher Pro X electric truck series. VECV delivered 436 electric units in H1 FY26, gaining a 24% market share in certain EV sub-segments.

Market Expansion

Royal Enfield has expanded its distribution network to approximately 70 international markets and established five assembly operations in Argentina, Thailand, Colombia, Brazil, and Nepal.

Market Share & Ranking

Royal Enfield maintains a leadership position in the >250cc motorcycle segment in India. VECV holds a 24% market share in the small but growing 2 to 3.5 tonne electric truck market.

Strategic Alliances

VE Commercial Vehicles (VECV) is a long-standing joint venture between Eicher Motors Limited and the Volvo Group.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward premiumization in motorcycles and electrification in commercial vehicles. EML is positioning itself with the Eicher Pro X EV range and new 450cc motorcycle platforms.

Competitive Landscape

Key competitors include domestic and international OEMs entering the 250cc-500cc motorcycle segment, which may limit EML's pricing power over the medium term.

Competitive Moat

The moat is built on a niche brand value proposition and an expansive after-sales network. Sustainability is reinforced through community building and 'market activations' that create high consumer switching costs.

Macro Economic Sensitivity

VECV performance is highly sensitive to GDP growth, infrastructure spending, and the e-commerce boom, which drive freight demand for commercial vehicles.

Consumer Behavior

Consumer confidence remains high, reflected in record bookings during the festive season and a clear preference for the 'aspirational status' of the Royal Enfield brand.

Geopolitical Risks

Political disruptions in Southeast Asian markets have impacted export traction, although VECV exports still grew 61.3% in Q2 FY26 to 1,823 units.

⚖️ Regulatory & Governance

Industry Regulations

Operations are exposed to increasing regulatory interventions including stricter emission norms (BS-VI and beyond) and enhanced safety standards for both two-wheelers and commercial vehicles.

Taxation Policy Impact

The provision for taxation for H1 FY26 stood at INR 797.3 Cr on a Profit Before Tax of INR 3,372 Cr, representing an effective tax rate of approximately 23.6%.

Legal Contingencies

A pending demand was issued on November 20, 2025, regarding a mismatch in the place of unloading goods in E-waybills/E-Invoices. The company assesses this demand as not maintainable and is evaluating an appeal.

⚠️ Risk Analysis

Key Uncertainties

Key risks include the cyclicality of the commercial vehicle industry, increasing competition in the premium motorcycle segment, and the slow pace of financier adoption for electric vehicle loans.

Geographic Concentration Risk

High concentration in India, with 89% of revenue derived domestically, making the company vulnerable to local economic downturns.

Third Party Dependencies

Dependency on financiers is a critical risk for the EV segment, as banks are not yet fully open to financing electric trucks and buses due to residual value uncertainties.

Technology Obsolescence Risk

The transition to electric vehicles poses a long-term risk; however, EML is mitigating this through the launch of the Eicher Pro X electric truck range.