Eicher Motors share price: Stock top Nifty gainer, jumps over 6% intraday after healthy Q4 results – brokerages see up to 22% upside

Auto major Eicher Motors share price spurted over 6 per cent to touch a day’s high level of Rs 2587 per share on the BSE intraday on Monday, after in-line March quarter results for the financial year 2021-22 (Q4FY22). Brokerages bullish on stock see up to 22 per cent potential growth in the stock.

Eicher Motors reported an overall in-line set of results in Q4FY22, said YES Securities, maintaining a Buy rating with a target price of Rs 2,972 per share, which translates into an upside of 22 per cent.

After witnessing severe headwinds over the last 24 months, YES Securities expect volumes to grow hereafter, besides added, the recent launches could be an inflection point for RE (Royal Enfield) as a completely new and improved platform could drive a revival.

VECV (VE Commercial Vehicles) would see a cyclical recovery in volume and profit, in turn boosting consolidated PAT CAGR to 46 per cent over FY22-24E, YES Securities said, adding that the stock trades at 24.1x/18.7x FY23E/FY24E consolidated EPS.

Similarly, Nirmal Bang, another brokerage, expects domestic volume to clock a healthy CAGR of 21% over FY22-24E, led by new model launches and a healthy model pipeline, along with easing supply chain concerns with ramping up of alternate chip sources.

The company has seen a 35% drawdown in domestic volume from its peak level in FY19. However, we don’t foresee FY24 surpassing FY19 levels.

“The company also indicated that demand remains healthy in both domestic as well as export markets with a robust order book. Enquiry levels are strong and new launches have been received well in the market with a waiting period of around 2-3 months,” Nirmal Bang said.

Nirmal Bang positive on Eicher, owing to healthy growth prospects and model Revenue/EBITDA/EPS CAGR of 25%/33%/42% over FY22-24E, and believe that after a 14 per cent correction in the stock price over the last 3 months, it is attractively priced now and has a favourable risk-reward.

Maintaining a BUY rating, Nirmal Bang value RE standalone at 24x FY24E EPS and VECV at 12x EV/EBITDA on FY24E to arrive at a target price of Rs 2,939 per share, with an upside of over 20 per cent from the Friday’s closing price of Rs 2436 per share.   

ICICI Direct Research said that Eicher Motors posted a healthy operational performance in Q4FY22. It said, “Eicher’s stock price has de-grown at around 4.3% CAGR from Rs 2,910 per share levels in May 2017, underperforming the broader Nifty Auto index”

ICICI Direct Research retained Hold on Eicher and awaits better monthly volume prints of RE Target, it values the stock at Rs 2,480 per share; assigning 23x PE to RE business & 20x PE to VECV business on FY24E numbers.