Eicher Motors witnessed a 3 percent decline in its share price to Rs 4,528 during morning trading on May 13, following concerns raised by several brokerages regarding the company’s bleak prospects after its fiscal fourth-quarter financial results.
The Royal Enfield maker reported an 18.2 percent increase in net profit to Rs 1,070 crore, driven by an increase in sales volumes, higher average selling price (ASP), new launches, and benign commodity costs.
The Eicher stock price has rallied over 21 percent in the last three months.
Morgan Stanley remains underweight, despite raising the target to Rs 3,533 per share. It said that Royal Enfield is transitioning from a phase of high growth with high margins to one of low growth with high margins. Considering long-term growth prospects, the current multiples appear costly. Like its peers, the company expressed optimism about volume growth in FY25.
JPMorgan’s outlook on Eicher Motors is neutral, with a target raised to Rs. 4,230 per share. The VECV business, a JV with Volvo, is expected to face challenges in the short term, partly due to ongoing elections and a slowdown in infrastructure activities. The stock is viewed to have limited upside potential, as the current price already reflects positive market share momentum along with the impact of recent launches and export recovery.
Nuvama Institutional Equities retains a ‘hold’ on the Eicher Motors stock. Royal Enfield (RE) is facing intense competition from global brands, and that is likely to sustain. “We expect underperformance to persist with a moderate volume CAGR of 5 percent in the domestic market over FY24–26,” analysts said.
On the other hand, Jefferies has assigned a ‘buy’ call on the stock and has hiked the price target to Rs 6,000. The international brokerage suggests that two-wheelers are poised for growth and there is hope for an improved long-term market share outlook. “Still time to buy,” the brokerage added.
For the financial year ended March 31, 2024, Eichers’ total revenue from operations was at Rs 16,536 crore, up by 14.50 percent as compared to Rs 14,442 crore recorded for FY 2022-23. Its EBITDA was Rs 4,327 crore, up by 25.65 percent on-year.
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