Among them were Jefferies CLSA and Nuvama which held on to their buy rating on the Eicher Motors shares and raised the price targets. Meanwhile, Motilal Oswal took a neutral view on the counter seeing weaker product mix a challenge to company’s margin expansion.
Leading auto company Eicher Motors on Friday posted a 55% growth in its consolidated net profit to Rs 1,016 crore in the September 2023 quarter from Rs 657 crore a year ago. Revenue from operations increased 17% year-on-year (YoY) to Rs 4,115 crore in the second quarter from Rs 3,519 crore in the same quarter of last year.
The topline and bottomline were the highest-ever quarterly numbers for the company. The company has also reported a record EBITDA of Rs 1,087 crore, with a growth of 32% YoY.
Here is what brokerages recommended:
CLSA: Buy | Target: Rs 4,252
CLSA maintains a buy view on Eicher Motors and raised the price target to Rs 4,252 from Rs 4,158. Royal Enfield beat its expectations as the demand for its motorcycles remains strong. RE plans slew of new disruptive products over next 12 months are likely to maintain its market share. VECV (VE Commercial Vehicles) business is also on track to deliver strong results driven by sustained demand, the brokerage noted.
Nuvama: Buy | Target: Rs 4,200
Nuvama reiterated a buy stance for Eicher Motors stock and raised the price target to Rs 4,200 from an earlier Rs 3,870. In its view, Eicher Motor will likely remain unaffected by the EV transition over the next few years as the acceptance of EV cruisers shall be gradual.
Eicher posted strong Q2FY24 revenue/EBITDA growth in line with Nuvama’s expectations and the brokerage expects a revenue CAGR of 10% over FY23–26E driven by new products and network expansion. Recent launches such as Meteor 650cc and Himalayan 450cc along with the upcoming line-up have potential to rev up growth in the face of higher competitive intensity.
Motilal Oswal: Neutral | Target: Rs 3,800
Motilal Oswal has a neutral view on Eicher Motors shares and it places the price target at Rs 3,800 based on December 2025E based SOTP), valuing the RE segment at 20x and VECV at 10x EV EBITDA on FY25E.
“Improving supply side, new product launches, and ramp-up in exports are expected to drive the next phase of growth for RE,” the brokerage said in its post earnings stock review. Stable commodity prices should help maintain steady margins and drive an earnings CAGR of 14% over FY23-25E, Motilal said further.
However, future margin expansion limited due to weaker
mix (lower exports), the brokerage further said.
Jefferies: Buy | Target: 4,650
Jefferies puts Eicher Motors as a high conviction buy as it upgrades stock’s FY23-26 EPS by 3-4% factoring in higher RE margins. Its FY24-25 EPS is 11-17% above street, the US brokerage said in a note. This brokerage sees the potential for RE multiples to expand as confidence in long-term market share rises. The stock is currently trading at 21X FY25E PE versus last 10Y average of 28X.
Despite strong operating performance, Eicher Motors has lagged the Nifty Auto Index by 20% in 2023 as increased competitive risk weighed on valuations, the brokerage note said. “We believe the risk to RE’s market share has not alleviated, while it enjoys strong tailwinds of 2W recovery, industry premiumization and potential to grow exports,” Jefferies said.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)