Buy Eicher Motors; target of Rs 1528: Firstcall Research

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Buy Eicher Motors; target of Rs 1528: Firstcall Research

Firstcall Research is bullish on Eicher Motors and has recommended buy rating on the stock with a target of Rs 1528 in its August 18, 2011 research report.

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Firstcall Research is bullish on Eicher Motors and has recommended buy rating on the stock with a target of Rs 1528 in its August 18, 2011 research report.

"Eicher Motors Limited, incorporated in 1982, is the flagship company of the Eicher Group in India and a significant player in the Indian automobile industry. Its 50-50 joint venture with the Volvo group, namely, VE Commercial Vehicles, is involved in business activities ranging from design, manufacturing and marketing of reliable, fuelefficient commercial vehicles of high quality and modern technology to manufacturing engineering components and providing engineering design solutions. Eicher Motors' two-wheeler division manufactures and markets Royal Enfield motorcycles."

"Eicher has around 2500 employees located in 4 manufacturing facilities and 49 marketing & area offices all around India. The Group has around 308 vendors supplying components and sub-assemblies, which testifies to the strength of the vendor base. The Group's products are brought to the customers through its strong network of around 142 dealers distributed across the length and breadth of the country. Eicher is present in over 40 countries across the world.  Eicher Motors has reported a rise of 25.03% net sales for the quarter ended June 2011. During the quarter, the company disclosed a profit of Rs. 763.10 million as against of Rs.551.80 million for the quarter ended June 30, 2010. Net sales are increased by 25.03% to Rs. 12984.20 million from Rs.10384.80 million in the same quarter previous year. In the same period, total income of the company was at Rs.13395.80 million, a rise of 24.28% over the prior year period. Company EPS is stood at Rs.28.29 for the quarter ended June 2011."

"At the current market price of Rs.1352.15, the stock is trading at 13.41 x CY11E and 11.50 x CY12E respectively. Earning per share (EPS) of the company for the earnings for CY11E and CY12E is seen at Rs.100.86 and Rs.117.58 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 29% and 58% over 2009 to 2012E respectively. On the basis of EV/EBITDA, the stock trades at 5.42 x for CY11E and 4.78 x for CY12E. Price to Book Value of the stock is expected to be at 2.17 x and 1.67 x respectively for CY11E and CY12E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 1528 for medium to long term investment," says Firstcall Research report.

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To read the full report click on the attachment