A company’s categorisation as large, mid, or small cap is based on its market capitalisation. To move up a category, a company must grow its market cap faster than the broader market. Since market cap thresholds rise with overall market growth, simply keeping pace isn’t enough.
In other words, to move from small-cap to large-cap, a company must significantly outperform. Most large caps didn’t start that way — they earned their place through steady growth and key milestones. This week, we spotlight Eicher: a leading player in the Indian automobile industry and the global leader in middleweight motorcycles.
How it started
Today Eicher is synonymous with motorcycles and Royal Enfield bikes, but this wasn’t always the case. Eicher started operations in the 1940s under the name Goodearth Company as a family business, selling and servicing imported tractors. And for a long time, the company stuck to the tractor business and did little outside of it. It’s the acquisition of the Royal Enfield brand of motorcycles that turned the company around and made it into the cash-positive behemoth it is today.
*Generative AI via Napkin
Key growth drivers and success factors
Over the course of 3 generations and 5 decades, Eicher managed to diversify and grow without deviating from the core industry it served: automotive and farm equipment. Divesting the tractor business allowed the company to focus on high growth segments like motorcycles and commercial vehicles. But it is the acquisition of the legacy British brand Royal Enfield – and how it scaled Enfield – that propelled Eicher into the big leagues.
- 2008 Volvo JV: Eicher Motors’ high-profile joint venture with Volvo in 2008 attracted significant interest from institutional investors, who saw potential in the company’s transition from a light commercial vehicle (LCV) player to a serious contender in the high-end truck segment. By 2010, they launched the VE-series of heavy-duty Eicher trucks. While the partnership delivered some progress, it fell short of market expectations. Established players like Tata Motors and Ashok Leyland retained their dominance in the heavy commercial vehicle (HCV) segment, offering comparable products at more competitive prices through indigenous development. Nevertheless, the Volvo JV helped Eicher secure the third-largest market position and ensured its participation in the sector’s broader growth.
- 2005 divestment of tractor business: In 2005, the third-generation CEO of the company, Siddharth Lal, decided to sell the tractor business — its core business so far — to Chennai-based Tractors and Farm Equipment (TAFE), for a value of ₹310 crores. The management stated that the divestment followed a strategic portfolio review, with the company now set to focus on its core commercial vehicles business.
The move was deemed risky and even apocalyptic, but it allowed Eicher India to focus on its core competency: commercial vehicles and motorcycles, specifically Royal Enfield. Eicher could concentrate its efforts and investments on the commercial vehicles and motorcycles sectors, where Siddharth Lal saw greater potential for growth and market leadership – and it paid off.
- 2012 Royal Enfield launches: Eicher’s investments in Royal Enfield began in the 1990s, when the company was still struggling. But it’s post-divestment in the 2010s that the bike brand really picked up and reached soaring new highs, with a focus on retro-style motorcycles. As of 2010, Royal Enfield was selling around 50,000 bikes annually. The company invested in R&D, modernised manufacturing, and expanded their dealership network. Their big bet was on the motorcycle market, and over the years, they managed to build a cult following around their bikes and the brand.
Under Siddhartha Lal’s leadership, Royal Enfield steadily expanded its brand and product portfolio. In 2012, it launched the Thunderbird 350 and 500 models, followed by the opening of its second manufacturing facility in Oragadam, Tamil Nadu, in 2013. That same year, the company introduced the Continental GT 535cc café racer in the UK, marking its first major global product launch.
In 2014, Royal Enfield unveiled its first concept store in Delhi and opened its first exclusive outlet in London. By 2015, it had acquired its long-time collaborators, UK-based Harris Performance, and established Royal Enfield North America—its first wholly owned distribution subsidiary outside India—headquartered in Milwaukee, Wisconsin. By then, Royal Enfield accounted for 40% of Eicher Motors’ revenue and a staggering 80% of its operating profit (EBITDA).
Over the following decade, the brand continued to innovate with new models such as the Himalayan, Continental GT, Interceptor, and Meteor. In 2017, it inaugurated a state-of-the-art technology centre in Leicestershire, UK, focused on designing and developing global motorcycle platforms. In 2024, Royal Enfield entered the EV space by announcing the launch of its completely new electric vehicle brand, Flying Flea, marking the beginning of a new breed of electric mobility.
Eicher Motors today – and beyond
Today, Eicher enjoys large cap status, right up there with the biggest auto companies in India like Bajaj Auto, TVS and Hero Motor Corp. The company has a market cap of well over 1.5 lakh crores, and has shown a compounded profit growth and return on equity of 23% over a ten year period.
According to the company’s 2024 annual report, they sold over 9 lakh motorcycles in FY 2023-24, an increase of 11%, with a presence in 65 countries and over 2000 retail touchpoints. The commercial vehicles segment also saw significant growth, with 85,560 vehicles sold during this period. On the earnings front, for the March 2024-ended quarter, Eicher Motors recorded a total revenue of ₹4,256 crore, up roughly 12% from the corresponding quarter of FY 2022-23.
Another key driver of Eicher’s international success is its commitment to expanding global operations. In December 2024, Royal Enfield commenced operations at its first fully-owned CKD (Completely Knocked Down) assembly facility outside India, located in Samut Prakan, Bangkok. The 57,000 sq. ft. plant has an installed capacity of over 30,000 units annually and serves as the sixth CKD facility globally, adding to plants in Argentina, Colombia, Brazil, Bangladesh, and Nepal.
Eicher’s transformation into a ₹1.55 trillion large cap powerhouse has been driven by three strategic pillars: a sharp focus on core businesses, the elevation of Royal Enfield into a global premium motorcycle brand under Siddhartha Lal, and smart scaling through manufacturing expansion and its joint venture with Volvo (VECV). By exiting its legacy tractor business and doubling down on motorcycles and commercial vehicles, Eicher demonstrated exceptional clarity and discipline, turning a family business into one of India’s most successful automotive stories.
Sources
Prime Investor: Eicher, The Multibagger No One Saw
Business Standard: Well-Timed Exit
Times of India: Eicher Sells Tractor Biz for 310 cr
The Economic Times: Tafe takes Eicher Tractors
Forbes: Eicher Motors Ltd: A Journey of Successful Turnarounds
Business Standard: Two-wheeler maker Eicher Motors joins Rs 1-trn market capitalisation club