Eicher Motors shares experienced a 6% surge in today’s early trading, reaching ₹3,940 apiece, driven by a rating upgrade from global brokerage firm UBS. According to CNBC-TV18, UBS raised its rating on the stock from ‘Neutral’ to ‘Buy’ and revised its target price to ₹5,000 apiece, up from the previous target of ₹4,300.
This adjusted target price suggests a potential upside of 34.5% from Tuesday’s closing price of ₹3,716 per share.
UBS highlighted that Royal Enfield’s forthcoming launch of the 450 cc platform aims to address competitive pressures and growth concerns in the market. The brokerage firm forecasts that Eicher Motors is positioned to achieve a domestic volume growth rate of 10% CAGR between financial years 2024 and 2026, outpacing the industry’s growth rate of 6% to 7%.
“We think the market is overlooking continued strength in Royal Enfield’s addressable market, subdued response to competition, Royal Enfield’s strong customer connect, and the start of a multi-year upgrade cycle among existing customers,” said UBS.
Eicher Motors’ Royal Enfield brand holds a significant presence in the premium bike market, commanding over 90% of the market share in motorcycles with engine capacities exceeding 250cc. In February, the company recorded a 2% year-on-year increase in sales for models with engine capacities up to 350cc, totaling 66,157 units. Sales for engine capacities exceeding 350cc surged to 9,778 units, marking a notable 45% growth compared to February 2023.
Overall, the combined sales of motorcycles with engine capacities up to 350cc and those exceeding 350cc reached 75,935 units in February 2024, showing a 6% growth from the same period last year. International sales also saw a rise, with 8,013 units sold in February 2024, representing a 13% increase from February 2023.
In the domestic market, the sales of trucks and buses rose to 6,930 units in February 2024, compared to 6,799 units in the corresponding period of the previous year. The total sales volume of VECV, encompassing both domestic sales and exports, stood at 7,424 units in February, marking a 1.9% year-on-year improvement.
Following the company’s robust performance in Q3 FY24, Axis Securities, a domestic brokerage firm, raised its target price for the stock to ₹4,250 apiece.
As of 10:00 a.m., the stock was trading with a gain of 4.40% at ₹3,878 apiece.
Disclaimer: Investors are advised to consult certified experts before making any investment decisions.
