Eicher Motors Gains Most In A Week As BofA Ups Target On 'Hunter'-Led Growth
BofA revised its price target upwards to Rs 3,900 apiece on improving growth outlook
Shares of Eicher Motors Ltd. gained the most in a week after BofA Securities reiterated its 'buy' rating and raised its target price for the company as it sees growth "finally coming back" at Royal Enfield.
The Hunter 350, Royal Enfield's latest motorcycle, is performing well, and this momentum is "being further topped up by Eicher Motors via targeted influencer-led marketing and aggressive financing push for other models too", the research house said in a report co-authored by analysts Gunjan Prithyani and Anuja Chauhan.
"It does seem to us that the Hunter name plate has potential to surpass the 10,000-12,000 monthly run rate expectations on the street. Beyond Hunter, there remain growth levers on replacement demand (existing Royal Enfield customer base of 50 lakh+), new launches including Bullet platform rollover and export scale up. Net net, growth is finally coming back at Royal Enfield."
The report also said margin concerns at the company seem "exaggerated" with operating leverage and raw material tailwind yet to play out.
It raised its earnings per share estimates by 4% for FY24, and revised its price target upwards to Rs 3,900 apiece on improving growth outlook. That implies a potential upside of 16.2%.
Shares of Eicher Motors gained as much as 3.4%, before ending 2.3% higher on Tuesday. Of the 48 analysts tracking the company, 34 maintain a ‘buy’, nine suggest a ‘hold’ and five recommend a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies a 2.1% upside.