Specialty vehicle maker Polaris (PII) announced its decision to separate its Indian Motorcycle business into a standalone company. Moreover, Polaris has entered into an agreement to sell a majority stake in Indian Motorcycle to private equity firm Carolwood LP. PII stock rallied 10% as of writing.
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Rationale Behind Polaris’ Move to Separate Indian Motorcycle
Polaris didn’t disclose the financial terms of the sale of the majority stake in Indian Motorcycle to Carolwood. The transaction is expected to close in the first quarter of 2026. The company expects Indian Motorcycle to be successful under Carolwood’s ownership and stated that it will maintain a small equity position in the business after the completion of the transaction. About 900 employees will transition as a part of the new Indian Motorcycle Company.
Indian Motorcycle, which Polaris bought in 2011, contributed about $478 million, or 7%, of the company’s overall revenues in the trailing twelve-month period ended June 30, 2025. The separation of this business is expected to be accretive to Polaris’ annualized adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) by about $50 million and to adjusted earnings per share (EPS) by approximately $1.00.
Polaris believes that the separation of Indian Motorcycle will help both businesses capitalize on their respective market strengths. The company believes that this move will further strengthen its focus on areas in its portfolio that offer the strongest growth potential. The separation of Indian Motorcycle comes as Polaris aims to streamline its operations amid weak consumer demand and tariffs. Earlier this year, the company withdrew its annual sales and profit outlook due to tariff-related and macroeconomic uncertainties.
Polaris Provides Favorable Q3 Update
Ahead of its Q3 results on October 28, 2025, Polaris announced favorable preliminary results. The company said that it expects Q3 sales to be at the high end of its previously issued guidance range of $1.6 billion to $1.8 billion. Polaris highlighted improving retail trends, with Off-Road Vehicles (ORV) (excluding the Youth segment) business up in the low double digits, and continued strong share gains in ORV.
Furthermore, Polaris projects third-quarter adjusted EPS in the range of $0.31 to $0.41, which is significantly higher than the company’s original expectations. The company attributed this upside to higher-than-expected shipments, strong cost management, and ongoing progress within its operational efficiency initiatives.
Is PII a Good Stock to Buy?
Currently, Wall Street is sidelined on Polaris stock with seven Hold recommendations. The average PII stock price target of $54.50 indicates 11.18% downside risk. As of Monday’s closing, PII stock was up 6.5% year-to-date.
