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Last Updated : Apr 03, 2019 11:47 AM IST | Source: Moneycontrol.com

Eicher Motors slips 2% after Nomura rating downgrade, price target cut

Nomura expects further 6-7 percent price increase from Q4 due to a switch-over to BS-6 norm. "Company may need to re-look at the pricing strategy/incentives."

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Royal Enfield 650 twins | Royal Enfield officially launched its first 650cc parallel-twin engine with the Interceptor 650 and the Continental GT 650. With an engine that churns out 47 PS and 52 Nm, the Interceptor won this year's Indian Motorcycle of the Year Award. (Image source: Royal Enfield)
Royal Enfield 650 twins | Royal Enfield officially launched its first 650cc parallel-twin engine with the Interceptor 650 and the Continental GT 650. With an engine that churns out 47 PS and 52 Nm, the Interceptor won this year's Indian Motorcycle of the Year Award. (Image source: Royal Enfield)
 
 
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Royal Enfield maker Eicher Motors shares fell 2 percent intraday on April 3 after Japanese brokerage firm Nomura downgraded the stock to reduce from neutral, citing challenging demand outlook.

The stock was quoting at Rs 20,220.00, down Rs 361.05, or 1.75 percent on the BSE, at 1102 hours IST.

The investment firm also slashed its price target on the stock to Rs 18,335 from Rs 20,653 earlier as competition could further impact growth and the demand outlook remained challenging.

Growth is impacted by a 14 percent price hike since August 2018 as Royal Enfield raised model prices more aggressively than the increase in cost, the research house said.

Nomura expects further 6-7 percent price increase from Q4 due to a switch-over to BS-6 norm. "Company may need to re-look at the pricing strategy/incentives."

The brokerage lowered its volume estimates by 10 percent for FY20 to 8.23 lakh units, flattish YoY and cut standalone margin by 100 bps to 30.9/30.3 percent & EPS by 12 percent for FY20-21.

Royal Enfield sales in March 2019 declined 20 percent to 60,831 units, against 76,087 units sold in March 2018 but exports increased 28 percent to 2,397 units YoY.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
First Published on Apr 3, 2019 11:47 am
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