Whalesbook
Himalayan 450 Fuels Growth
The upgrade comes as Eicher Motors navigates a challenging global auto market, with the new Himalayan 450 model central to its plan to capture demand in both domestic premium and select export markets. Motilal Oswal Financial Services upgraded the stock to Neutral, setting a price target of ₹6,960. This values the company at about 30 times projected FY27 earnings, seen as fair after a recent stock drop of around 17% from its highs.
The Himalayan 450 is a versatile Royal Enfield platform proving popular at home and abroad. Variants like the Mana Black edition have kept demand strong in the adventure-touring segment, despite higher GST rates affecting the broader 350cc+ market.
Himalayan Drives Export Growth
Internationally, the Himalayan 450 is playing a large role in Royal Enfield's export performance. Brazil has emerged as the largest export market, accounting for about 25% of volumes, with strong growth driven by the Himalayan 450 and Guerrilla 450. Industry awards, such as a major motorcycle prize in Brazil, have boosted brand appeal.
However, markets like Europe, the US, and Thailand, which together make up half of export volumes, are facing pressure from economic slowdowns, tariffs, and high dealer stock levels. Management's focus is on defending volumes in these regions while expanding aggressively in Latin America and parts of Asia-Pacific, including Japan and South Korea.
350cc Segment Remains Strong
While the Himalayan reshapes the growth narrative, Royal Enfield's core 350cc segment, built on the Classic and Bullet models, remains robust. Demand routinely exceeds supply, with this segment running at peak capacity and holding minimal inventory of just 7-10 days. Growth is appearing more in smaller towns, pointing to steady long-term sales potential.
650cc Models Show Gradual Recovery
The 650cc platform is stabilizing after new models like the Classic 650 and Bullet 650 were launched. Although usage is still below peak, these new products are drawing more customers to showrooms. The recovery is expected to be gradual.
Focused Growth Strategy
Motilal Oswal describes Royal Enfield's near-term focus as disciplined, prioritizing profit over just increasing sales volume. Strong cash flow from the 350cc models, along with a steady recovery in the 650cc segment, supports the focus on key bikes like the Himalayan 450.