Polaris Industries faxed its dealer network late Tuesday afternoon to announce it had acquired Indian Motorcycle Ltd., a move I see as placing a big target on Harley-Davidson’s back and raising the specter that Harley might be facing some decent domestic competition in the near future. Indian is a company that is advised by Stellican Ltd. and Novator Partners LLP, two United Kingdom private equity firms.

Adding some support to my prognosis, Polaris Industries Inc. (NYSE:PII) stock was up 26 percent this morning after news of the Indian Motorcycle Ltd. (IML) acquisition. That’s a gain of 48 percent year-to-date. And further bolstering the news was the release today of first-quarter figures for Polaris that showed net income of $47.3 million, or $2.34 per diluted share for the quarter ended March 31, 2011.

By comparison, first-quarter figures for 2010 showed a net income of $19.8 million, or $0.59 per diluted share. The Q1 figures for this year also show that Polaris’ off-road vehicle sales rose 55 percent to $388 million. On-road vehicles/Victory Motorcycle sales rose 77 percent to $44.9 million, and Polaris snowmobile sales were up 61 percent to $8.9 million. The gross margin percentage increased 210 basis points to 28.3 percent.

Stay tuned for more developments!