Eicher Motors Shares At Six-Week High After Q3 Profit Beats Analysts' Estimates

Shares of Eicher Motors Ltd. gained the most in six week since Dec. 29, after third-quarter profit beats analysts' estimates.

The Royal Enfield makers' third-quarter profit rose 62% to Rs 741 crore, aided by higher sales and a low base from last year. Analysts' estimates compiled by Bloomberg had pegged the number at Rs 721 crore.

Eicher Motors is on track to deliver the highest Royal Enfield volumes and earnings-per-share in the current financial year despite the ongoing two-wheeler downturn, Jefferies said.

Analysts see multiple positives for the company in upcoming quarters with industry premiumisation, two-wheeler recovery, low risk of EVs in the middle-weight segment and limited competition.

Now that nearly six months have passed since launch of Hunter 350, the concerns of cannibalization of Classic model’s customers have also subsided.

Shares of the company rose 2.69% to Rs 3,261.20 apiece as of 10:30 a.m., while the benchmark Nifty 50 eased 0.06%. Total traded volume stood at 5.1 times its 30-day average. The relative strength index was at 52.1.

Out of the 45 analysts tracking the stock, 31 maintain a 'buy' rating, nine recommend a 'hold' and five suggest 'sell' the stock, according to Bloomberg data. The 12-month consensus price target implies an upside of 15%.

Here’s what analysts said on the company’s Q3 performance:

• Upgrade the stock to 'neutral' as the current valuation is in the "fair value" zone.

• The target price of Rs 3,264 represents a 3% potential gain.

• Following the launches of the Bajaj Triumph and Hero MotoCorp's Harley, there is a risk of increased competition.

• Expect Royal Enfield to clock 7-8% compounded annual growth in the medium term.

• Retain 'buy' with a price target of Rs 4,250 per share, a potential upside of 34%.

• International expansion is bearing fruit, with exports contributing 9% of total volumes, up from 2-6% in FY17-FY21.

• Don’t see evidence of any significant cannibalisation from Hunter based on the company’s volume trajectory.

• Eicher Motors faces little risk of electrification and competition.

• Maintain 'buy' with target price of Rs 3,625, implying a potential profit of 14%.

• The third-quarter performance did not reflect the full benefits of low raw material costs and price hikes.

• With supply issues largely behind and Hunter’s success, a recovery in the core 350cc portfolio in India and exports are growth drivers.

• Lower domestic and export volumes along with margin estimates for FY24.

• Upgrade to 'buy' from 'accumulate' earlier with a target price of Rs 3,786, implying an upside of 19%.

• The stock has corrected 18% in the last four months, making the risk-reward ratio favourable.

• Expect domestic volume to grow at a 20% CAGR over FY22–25 with a strong model pipeline.

• Entry into new markets and market share gains in existing markets are needed to drive export growth.