Accumulate Eicher Motors; target Rs 2249: Dolat Capital

"Eicher Motors reported top-line revenue at Rs 15.9bn, up 22% YoY led by ~8% YoY volume growth in M&HCV. The company sold 11,979 medium and heavy commercial vehicles (M&HCV). It sold 27,244 motorcycles in 2QCY12, up 62% YoY."

"The company’s operating margins declined 180bps QoQ to 8.8%. This was mainly led due to higher staff costs and other expenses. Staff costs was in line with expansion plans. The higher incentives to push sales led to higher other expenses. EBIDTA for the quarter was Rs 1.4 bn, up 11% YoY. The company reported its PAT at ` 760mn. This was because of lower other income. The EPS for the quarter stood at Rs 28.2."

Valuation

"Macro headwinds may affect the demand in the commercial vehicle segment. Accordingly, we estimate volume growth of 12% in CY13 in the CV segment. Its demand in the motorcycle segment continues to be strong with a waiting of almost 2-3 months. With supply issues being sorted, we expect this segment to grow 30% YoY. We also believe margins may remain stable at these levels. The stock is currently trading at a P/E of 13.9x CY14E. We recommend Accumulate," says Dolat Capital research report.

Non-Institutions holding more than 90% in Indian cos

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