Royal Enfield Guerrilla 450 Has Sector Watchers Divided

There is another new entrant in the 450-cc two-wheeler segment — the Royal Enfield Guerrilla. The Siddhartha Lal-led team debuted the roadster in Barcelona on its Sherpa 450 platform, which is used for the new Himalayan as well. Interestingly, the launch comes at a time when Royal Enfield’s volumes have lagged in the first three months of fiscal 2025, i.e. between April to June 2024.

So, will this launch help the two-wheeler giant shore up its numbers? Sector watchers are conflicted. While Nomura doesn’t see the launch as material growth, Citi says it provides good upgrade option to the current 350-cc Royal Enfield owners.

With sales expected to start in August, the new bike is priced at Rs 2.39 lakh ex-showroom and this, in turn, means that it will be taking on Bajaj Triumph 400 headon.

The bike has been launched in three variants—Analogue (base), Dash (mid-level) and Flash (top end).

Citi feels it provides a good upgrade option to current 350-cc Royal Enfield owners. It also says it could also support export volumes for the company.

Nomura, Not So Positive

On the other hand, Nomura feels that Guerrilla 450 may not be able to revive growth. The product is priced at 35% premium to Royal Enfield 350-cc bikes and Nomura feels the segment above 400-cc has not seen much increase in RE's share despite several interesting products from Royal Enfield with the Himalayan and the Scram 411.

One of the potential reasons for this could be the large section of customers uses the bikes for commuting with launches such as Guerrilla, these bikes are not only expensive but more difficult to ride in traffic as they tend to heat up. Hence, emphasising that they do not expect much improvement in the overall growth for Royal Enfield.

The Guerrilla is also based on similar 452-cc engine used in the Himalayan 450. Currently, it is on lower pricing of 16% economical than the Himalayan 450, and Nomura feels it is focused on increasing its reach with more focus on in-city usage.

Emkay Concurs Negative Stance 

Another brokerage, Emkay, while writing on the launch has said that this will be RE’s first attempt at the sports segment, a far cry from its strength around classical and retro-looking bikes offering relaxed riding.

The segment has been dominated by the likes of Bajaj and TVS with only 10,000 units per month, despite new launches by Bajaj with the Triumph and Hero MotoCorp with the Harley Davidson. Emkay believes the new launch is unlikely to garner more than 2000-3000 units per month akin to Himalayan 450.

Citi has maintained a ‘Buy’ rating with target price of Rs. 5300 per share, implying a potential upside of 9% as of 11:15am price of Eicher of Rs. 4854 rupees. It values RE’s business at Rs4,900 /share, based on 30xSep’25E with value of VECV at around Rs380/share, based on 11xSep’25E EV/EBITDA.

Both Nomura and Emkay have maintained their ‘Reduce’ rating with target prices of Rs. 4119 and Rs. Rs. 3750 per share. While Nomura believes the >250cc motorcycle market has space for two-three players with RE still has an 86% share in this market  it expects slowest growth of 11% CAGR over FY24-26F amongst 2W coverage stocks.

Emkay said despite building-in cyclical recovery and competitive cycle being largely behind, structural growth woes continue to haunt RE. They see upgrade and replacement demand for RE remains largely elusive and thus, its several product actions lined up in coming times are unlikely to automatically translate into additional growth