Eicher Motors shares: ‘On-track for best year’, say analysts; bullish post Q3

Eicher Motors shares: ‘On-track for best year’, say analysts; bullish post Q3


Eicher Motors Ltd reported an over 62% rise in consolidated net profit at 741 crore for the third quarter ended December 31, 2022 (Q3 FY23), riding on strong sales, as compared to 456 crore in the same period last fiscal. The company said its commercial vehicle joint venture Volvo Eicher Commercial Vehicle (VECV) recorded its highest ever third quarter sales at 18,162 units, a growth of 13% over the corresponding period last year. 2-wheeler arm Royal Enfield clocked total dispatches at 2,19,898 motorcycles, up 31% over last year.

“Eicher Motors (EIM) Q3 EBITDA rose 47% YoY (inline with JEFe) to a new high. RE volumes grew 31% YoY while EBITDA/vehicle was flat QoQ. Despite the ongoing 2W downturn, we believe EIM is on track to deliver the highest RE volumes and EPS in FY23E. We see multiple tailwinds for RE: 2W demand recovery, industry premiumization, limited competition and low EV risk. We don’t see evidence of any significant cannibalization from Hunter either,” said global brokerage Jefferies.

The global brokerage has retained Buy rating on Eicher Motors shares with a target price of 4,250 apiece, on good Q3 and believes it is on-track for its best year amid an industry downturn.

“Despite the ongoing 2W industry downturn, we believe EIM is on track to deliver the highest Royal Enfield (RE) volumes, RE EBITDA/vehicle and consolidated EPS in FY23. We fine-tune estimates, and see EIM’s earnings growing at a strong 29% CAGR over FY23-25E. We continue to like RE’s strong growth outlook, believe the company faces limited competition, and see cruiser motorcycle segment at low risk of electrification,” Jefferies added.

“EIM remains our preferred pick in the 2W space as we anticipate (1) volume growth from new product launches, (2) higher export revenue mix, (3) increase in mix of spares and merchandise revenue to aid both revenue growth and margin expansion,” said another brokerage Prabhudas Lilladher while maintaining ‘BUY’ tag on the auto stock with a revised SoTP based target price of 4,120.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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