Citi bets on Eicher Motors but will commercial vehicle biz drag?

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Citi has a buy rating on Eicher Motors but with a reduced target of Rs 22700 from Rs 23000 per share. It has also also FY17/18 earnings per share (EPS) by 7 and 6 percent respectively reflecting cuts in VE Commercial Vehicles FY17/18 EBITDA margin estimates. VECV is a joint venture between the Volvo Group and Eicher Motors. VECV turned free cash flow positive with Rs 360 crore in FY16. VECV's EBITDA margins rose 80 basis points (bps) annually in FY16 but gross margins declined 100bps. However, it continued to show smart growth in commercial vehicle (CV) as well as two-wheeler sales in May. It sold 5,771 vehicles in May, a growth of 43 percent over 4,035 units sold in year-ago period. The month-on-month growth in sales was 7 percent.After discussion with management on annual report, Citi says that the auto major's big thrust is on international markets, while dealership network expansion continues. The management also said that FY16 production target for Royal Enfield is 675,000 and VECV will enter sub-5T GVW segment with the Pro1049.In an earlier interview to CNBC-TV18, Vinod Aggarwal, CEO - VE Commercial Vehicles had said that demand is continuing to improve in Volvo-Eicher Commercial Vehicles (VECV), due to new products launch. “We have much better penetration now, we have company owned dealerships operating in some parts of the country and then of course there are a lot more infrastructure projects which are taking off, so there will be more and more demand. So on the whole we are doing better and we expect to do like this,” he said. At 09:39 hrs Eicher Motors was quoting at Rs 18,493.25, down Rs 127.40, or 0.68 percent.

Posted by Nasrin SultanaFollow @NasrinzStory