India's Eicher expects Royal Enfield motorcycle exports to pick up after two-year slump

By Nandan Mandayam and VarunVyas Hebbalalu

BENGALURU (Reuters) -India's Eicher Motors said on Tuesday that it expects international sales of its Royal Enfield motorcycles to pick up in the next two to three quarters after struggling with exports for nearly two years.

Strong domestic sales of Royal Enfield, a premium-priced motorcycle, helped Eicher post a bigger-than-expected 12.3% jump in revenue to 41.79 billion rupees ($504 million) for the October-December quarter.

However, Royal Enfield exports, as a share of total sales, were just 6.4% in the quarter, compared with a peak of 16.8% in fiscal 2022, nearly two years back.

The drop was mainly due to high interest rates and inflation in key export markets such as the UK, U.S., Europe and Thailand, Royal Enfield Chief Executive B. Govindarajan said in an analyst call.

However, most of these countries are expected to start lowering rates later this year as inflation eases, which should help sales of pricier products like the Royal Enfield.

"We may see growth in international markets in the next two-three quarters but have to look at it from a country-to-country basis," Govindarajan said.

Amit Hiranandani, an analyst at brokerage SMIFS, was "positive" Eicher would increase its exports, a view shared by Prabhudas Lilladher's Himanshu Singh who noted the company was yet to start overseas deliveries of the Himalayan 450, a new Royal Enfield model.

However, the trade disruptions in the Red Sea have driven up freight costs by at least 25% on some routes and delayed shipments by 30 days, Eicher's finance chief, Vidhya Srinivasan, said.

In India, Royal Enfield was virtually unchallenged by imported Triumphs and Harley-Davidsons until Bajaj Auto started making two Triumph models locally and Hero MotoCorp started manufacturing one Harley model.

Still, healthy Royal Enfield sales and a higher contribution from Eicher's joint venture with Volvo to makes trucks and buses, helped the company post a better-than-expected 34.4% jump in third-quarter profit to 9.96 billion rupees. ($1 = 82.9630 Indian rupees)

(Reporting by Nandan Mandayam in Bengaluru; Editing by Sohini Goswami, Mrigank Dhaniwala and Savio D'Souza)