Eicher Motors (EIM's) performance beat was driven by VECV, while RE was in line with our estimates. Delayed product launches (first due to the second COVID wave and now due to the semiconductor shortage) have shifted the recovery timelines to 2HFY22.Standalone gross margin declined by just 30bp YoY to 40.6% (est. 39.7%).

Gross profit per unit of ~Rs 63k was the highest ever. Adjusted EBITDA margin fell 535bp QoQ to 17.5% (est. 18.8%) due to operating deleverage.

As per the management, demand remains good, but supply-side issues have impacted ramp-up in production and new product launches. Though it is seeing a step-by-step improvement in supply-chain issues, it expects the semi-conductor shortage to continue to impact over the next few months.

Commenting on the result review, Motilal Oswal Institutional Equities said, "We cut our FY22E consolidated EPS by 6% to account for the delayed launch of the new Classic, while maintaining our FY23E earnings estimates. We maintain our Buy rating with a TP of Rs 3,250 (Mar'23E SoTP)." 

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