Eicher Motors Shares Rally 4.5% On Royal Enfield Capacity Expansion Plans

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Shares of Eicher Motors jumped 4.5% in intra-day trade on Wednesday, the highest since February 1 on the back of Royal Field's announcement to increase its capacity output.

Eicher Motors Shares Rally 4.5% On Royal Enfield Capacity Expansion Plans

As per a filing with the exchange, the company announced capacity optimisation at its Oragadam facility near Chennai in Tamil Nadu in this financial year. The company will also incur an expenditure of Rs. 800 crore at the nearby Vallam Vadagal facility as part of the phase-2 expansion. The company also indicated plans to set up wholly-owned subsidiary units in Thailand and Indonesia.

In a statement Siddhartha Lal, managing director and chief executive officer at Eicher Motors Ltd said, "Our demand continues to exceed supply, and we continue to see strong growth from all our markets". He added, "Therefore, we have decided to expand our production capacity."

The company said the optimization plan at the company's Oragadam facility would increase its production capacity to 9.5 lakh units in comparison to 9 lakh units.

In the past decade, the stock returned a huge 11,000% return to its shareholders as the demand for the company's motorbike Royal Enfield increased.

At 3:20 pm, the stock quoted higher by 3.29% at Rs. 28,974 on the BSE.

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Story first published: Wednesday, April 4, 2018, 15:29 [IST]
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