Buy Eicher Motors; target Rs 3850: Motilal Oswal
Motilal Oswal is bullish on Eicher Motors and has recommended buy rating on the stock with a target price of Rs 3850 in its December 11, 2012 research report.
December 12, 2012 / 13:10 IST
Motilal Oswal is bullish on Eicher Motors and has recommended buy rating on the stock with a target price of Rs 3850 in its December 11, 2012 research report.
"Eicher Motors, given its leadership position, cult brand equity and minimal competition, Royal Enfield is well positioned to benefit from increasing trend of lifestyle biking. Currently, demand for Royal Enfield motorcycles far exceeds supply with average waiting period at 6-8 months. Capacity expansion (new plant to start in 1QCY13), new launches (Thunderbird 500 and Café Racer), and network expansion to drive 25%/29% volume/EBTIDA CAGR over CY12-15E.CVs: VECV better placed to challenge incumbents
The Indian CV industry is likely to evolve giving new players opportunity to challenge the incumbents. VECV is better placed among new entrants, given the marriage of Volvo's technological strength with Eicher's local market expertise. It is taking initiatives to gain 15% share in HCVs and initial signs of success are visible. Volvo intends to use Eicher as a mass market brand and VECV as its low cost manufacturing hub over the long term; this presents a sizable export opportunity. We estimate VECV to register a CAGR of 16%/28%/37% in volumes/ revenues/EBITDA over CY12-15.MDEP: A linear business opportunity
MDEP holds immense strategic importance for both the Volvo Group and VECV. While the Volvo Group would become entirely dependent on VECV for Euro 5 and Euro 6 base engines, MDEP will improve VECV's positioning in HCVs with headstart on futuristic technology. Moreover, MDEP provides a stable business opportunity to VECV. We estimate MDEP (excluding captive consumption of engine by VECV) to contribute 26%/20%/17% to VECV's revenues/EBITDA/PAT in CY15.Initiating coverage with a Buy rating
EIM provides strong growth visibility, driven by both Royal Enfield and VECV operations, notwithstanding near-term weakness in CV business. We estimate 28% sales CAGR, 34% EBITDA CAGR and 28% PAT CAGR over CY12-15. The stock has re-rated post the JV with Volvo. We expect appreciation from current levels to be largely driven by earnings growth. Initiate coverage with a buy rating and target price of INR3,850, 45% upside over two years," says Motilal Oswal research eport.FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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