Nirmal Bang is bullish on Eicher Motors and has recommended buy rating on the stock with a target of Rs 3023 in its February 15, 2013 research report.
“Eicher Motor consolidated results were marginally below estimates reflecting slowdown in the overall commercial vehicle segment. Standalone business continued to witness demand momentum. However, higher other expenses (launch expenses of Thunderbird 500) led to a sharp decline in margins on QoQ basis in the standalone business. Moreover, lower other income reflecting the change in accounting policy to adhere to revised schedule VI (impact of Rs 40.8 cr) also impacted the bottom line performance. This was somewhat compensated by lower tax rate which arrested a steep decline in PAT. Eicher Motors has witnessed the impact of the slowdown evident in the overall commercial vehicle industry in line with industry trend. Despite the overall slowdown in the industry the company has been able to increase its market share in the CV segment which is encouraging. Moreover, the company’s standalone business (Royal Enfield) continues to witness strong demand for its two wheelers and the company’s upcoming engine project with Volvo will also add to revenues from CY13E onwards. Consolidated net cash stands at Rs ~804 cr. We have introduced CY14 estimates.”
“Although in short term we may see some correction in the stock considering the challenging CV environment, we believe that the stock can be accumulated at such declines. At CMP the stock is trading at P/E of 17.43x CY13E and 13.22x CY14E. We maintain our positive outlook on the stock considering the strong fundamentals of the company. Assigning a target multiple of 15x on CY14E EPS we arrive at a target price of Rs 3,023 indicating an upside of 13.5% from current levels,” says Nirmal Bang research report.
Public holding more than 90% in Indian cos
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