Eicher Motors Shares Drop as Analysts Doubt Big Sales Boost from New Royal Enfield Guerrilla 450

Royal Enfield launched the Guerrilla 450, a new 450cc motorcycle, aiming to compete in the sports segment. Bookings are open in India and Europe, with sales starting on August 1 in India and mid-August in Europe. The bike will come in three variants—Flash, Dash, and Analog—priced between ₹2.39 lakh and ₹2.54 lakh.

Despite the launch, analysts are skeptical about the Guerrilla 450 driving significant sales for Royal Enfield. They expect monthly sales to be around 2,000-3,000 units, similar to the Himalayan 450.

Competition and Market Analysis:

The 450cc segment, dominated by Bajaj Auto and TVS Motor, only sees about 10,000 units sold per month. Competitors like Hero MotoCorp-Harley and Bajaj Auto-Triumph haven’t made a significant impact in this segment, with combined monthly sales around 4,000 units. The 450cc market remains small, making up less than 1% of the domestic motorcycle industry.

Analysts’ Views:

• Emkay Global: Predicts limited sales impact from Guerrilla 450, estimating monthly volumes of 2,000-3,000 units. Emphasizes Royal Enfield’s strong customer community as a key advantage.
• Kotak Institutional Equities: Forecasts slower growth in the >250cc segment due to higher penetration in richer states, affordability issues, and increased competition. Believes Guerrilla 450 won’t significantly boost demand or shift consumers to higher cc bikes.

Volume and Market Trends:

Royal Enfield’s domestic sales have been flat recently due to weak demand in the >250cc segment and competition. Analysts doubt the Guerrilla 450 will revive this demand, citing limited benefits for consumers to switch from 250-350cc motorcycles to >450cc bikes.

Eicher Motors Stock Performance:

Kotak Equities and Emkay Global both maintain a ‘Sell’ rating on Eicher Motors shares, with target prices of ₹3,400 and ₹3,750 respectively. On Thursday, Eicher Motors shares fell by up to 2.4% to ₹4,799.90. The stock has been flat over the past month but has gained over 12% in three months and 17% year-to-date.

At 11:10 AM, Eicher Motors shares were trading 1.07% lower at ₹4,865.45 on the BSE.