Eicher Motors gains as Royal Enfield signs Rs 3,000-crore MoU with Tamil Nadu

Siddhartha Lal - Managing Director, Eicher Motors Limited

Shares of Eicher Motors gained nearly a percent in the morning session on January 9, a day after its subsidiary, Royal Enfield, signed a Rs 3,000-crore contract with the Tamil Nadu government.

At 9.15 am, the stock was trading at Rs 3,909.25 on National Stock Exhcange.

Royal Enfield, a unit of Eicher Motors, is set to invest Rs 3,000 crore over eight years in Tamil Nadu for new product development, electric vehicles (EVs), and capacity building. This move is expected to create approximately 2,000 jobs, the company told exchanges on January 8.

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The memorandum of understanding signed with the Tamil Nadu government during an investor summit outlines plans for greenfield and brownfield projects, emphasising product development and potential internal combustion engine (ICE) capacity enhancements.

Also Read: Jefferies reiterates buy rating on Eicher Motors, ups target price by 22%

Expressing gratitude for Tamil Nadu's support, CEO B Govindarajan said the MoU included infrastructural support and regulatory facilitation, including uninterrupted power supply.

Jefferies India reiterated the “buy” rating on Eicher Motors and raised the target price by 22 percent to Rs 4,650 from Rs 3,805 a share in a recent report.

The brokerage firm expects Royal Enfield to experience minimal impact from recent competitive launches and anticipates a potential re-rating. This positive outlook is based on growing confidence in the long-term sustainability of market share, driven by the tailwinds of two-wheeler demand recovery and a trend toward premiumization in the market, it said.

The stock has given a return of 22.49 percent over the last six months against an 11.14 percent gain in the benchmark Nifty.

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