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The domestic two-wheeler industry has been grappling with multiple challenges, owing to a slew of changes in regulations and rising commodity costs, which ultimately have led to elevated cost of acquisition. Royal Enfield has also witnessed a ~27% decline in volume over FY19-22, owing to the average cost of acquisition rising by ~33%.
However, we anticipate volume growth of ~20% over FY22-25E, propelled by new model launches (Hunter 350 being the latest one) positioned at aspirational first-time buyers, continued momentum in the export markets and customised financing options addressing the affordability concerns.
We expect Royal Enfield to surpass FY19 peak volume of 826,000 in FY24, largely on the back of pick-up in exports.
We expect exports to clock 19% compound annual growth rate over FY22-25E, aided by an entry into new markets and market share gains in existing markets.
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