Brokerages bullish on Eicher Motors as company HUNT(ER)S for growth over margins: Check target price

Eicher Motors share: Even a 1000-point-surge in BSE Sensex could not lift Eicher Motors shares which fell over 4 per cent on Friday. The correction was on the back of slightly lower than expected September quarter results posted by the company on Thursday. Yet, CLSA and Morgan Stanley remain bullish on this stock. So what is working for this stock?

Eicher Motors shares were trading at Rs 3538.70, down by Rs 163.05 around 1 pm.

Morgan Stanley is bullish on this stock giving a thumbs-up to company’s strategy to focus on growth instead of margins. “Eicher is doing the right thing in our view by focusing on growth over margin,” the brokerage noted.

The brokerage maintains an ‘Equalweight’ on Eicher Motors stock with a price target of Rs 4065. The upside is up to 10 per cent from the level of Rs 3701 at which it was recommended.  

Meanwhile, CLSA in its note said that the Q2FY23 results of Eicher were in line with its estimates. The brokerage company maintains a buy on Eicher Motors stock with a higher price target of Rs 4511.  The upside seen in this stock is 22 per cent.

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Eicher Motors' sub-brand Royal Enfield's recently-launched motorcycle Hunter 350 has upped the momentum for this mid-sized two-wheeler bike manufacturer, noted Morgan Stanley. The management is optimistic about volumes, going forward and also about the prospects of its VE Commercial Vehicle segment.

Company’s EBITDA margins is poised to improve in 2HFY23, the brokerage further said.

Eicher, which is the listed parent of popular Royal Enfield brand reported a net profit of Rs 657 in the September quarter which was up 76 per cent against Rs 373 crore the company reported in Q2 of FY22. The estimated Profit After Tax was Rs 685 cr.  

The revenues were up 56 per cent at Rs 3,519 crore in the reporting quarter versus Rs 2250 crore in the year ago period.  

EBITDA was at Rs 822 crore versus Rs 470 crore, up 75 per cent but lower than estimated EBITDA of Rs 878 crore.

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Technical View: 

Technical Analyst Nilesh Jain said that the expectations are always quite high from Eicher and even though the company registered its highest ever quarterly revenue and profits, the street’s expectations were more.

The stock is also trading in an oversold territory and today’s corrections are on account of profit booking, the Centrum Broking analyst added. He recommends a Hold for target of Rs 3800.

Source: BSE

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)