Shares of Eicher Motors surged close to 6 percent in early trade on August 9 after the company posted better-than-expected results for the April-June quarter.
The company reported a consolidated net profit of Rs 1,101 crore, up 20 percent on a year-on-year (YoY) basis, riding on favourable commodity prices, inventory benefits, and positive volume growth in the Royal Enfield (RE) segment. The company’s total revenue from operations stood at Rs 4,393 crore, which is an uptick of 10.2 percent as compared to Rs 3,986 crore in Q1FY24.
Regardless, despite the enthusiasm among investors after a strong first quarter, Eicher Motors, the maker of Royal Enfield, hasn't managed to win over all brokerages.
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JP Morgan maintains a 'neutral' rating while raising the target price to Rs 4,435, a downside of 3 percent from the current market level. The previous target price was Rs 4,230. The brokerage said that the margin outperformance was driven by pricing, and the VECV business is expected to see gradual improvement throughout the year.
Investec maintains a 'sell' rating while raising the target price to Rs 3,910 from Rs 3,850. With increasing competition in the premium 2W segment, Investec expects a slowdown in Royal Enfield's growth and considers Eicher's valuations to be rich.
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The firm maintains its 'buy' rating but has reduced the target price to Rs 5,500 from Rs 6,000 per share. Despite recent concerns over weakness in Royal Enfield (RE) volumes, Jefferies believes Eicher will benefit from the premiumization trend in the two-wheeler (2W) segment, with the most challenging phase of competition now behind. The firm has cut its FY25-27 EPS estimates by 2-4 percent.
UBS maintains a 'buy' rating with a target price of Rs 5,820. The Eicher management is confident of a volume recovery, and UBS believes that ongoing product and marketing initiatives should help revive domestic volumes for Royal Enfield.
Goldman Sachs maintains a 'buy' rating and raises the target price to Rs 5,600 from Rs 5,400. The firm highlights the potential upside from the recent Guerrilla launch and the upcoming new Classic model, which are expected to drive higher export volumes. Additionally, VECV is entering a period of lower taxes, which could add approximately 2 percent to the company’s earnings power.
Royal Enfield, a key division of Eicher Motors, sold 2,27,736 motorcycles in Q1 FY 2024-25, slightly up from the 2,25,368 motorcycles sold during the same period in FY 2023-24.
Talking about Eicher Motors’ performance, Siddhartha Lal, Managing Director said that the company has started the year positively, registering the best-ever quarterly financial performance with both Royal Enfield and VECV reporting steady growth.
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