Reduce Eicher Motors; target Rs 2400: Emkay
Emkay Global Financial Services has recommended reduce rating on Eicher Motors with a target price of Rs 2400, in its November 12, 2012 research report.
November 28, 2012 / 16:51 IST
Emkay Global Financial Services has recommended reduce rating on Eicher Motors with a target price of Rs 2400, in its November 12, 2012 research report.
Eicher Motors, consol performance was below estimates with poor operating performance from VECV, even as standalone results (RE) were broadly in line. Net revenues stood at Rs 14.8 bn (+2% YoY, -6 % QoQ) – in-line with estimates. Operating EBITDA at Rs 1.1 bn was 17% below estimates. EBITDA Margins for the quarter stood at 7.5% (-290 bps YoY, -130 bps QoQ) - while margins at Standalone (RE) business was in-line with expectations, it was the VECV business which dragged consol. margins. Adjusted Net Profit stood at Rs 660 mn (-10% YoY, -13% QoQ) - 13% below estimates.Standalone (RE) results were in line with expectations - EBITDA Margins for the quarter stood at 15.1% (+230 bps YoY, -20 bps QoQ). VECV EBITDA Margins for the quarter was below estimate at 5.8 % (-430 bps YoY, -180 bps QoQ) - RM-Cost/other-expenses were higher by 70 bps/60 bps QoQ, both higher than anticipated.We tweak our RE/VECV assumptions and cut our consol EPS estimates for CY12/CY13 by 5%/6% owing to cut in estimates on the VECV business. We introduce CY14 EPS est of Rs 200 and increase our SOTP based TP to Rs 2,400 (vs Rs 2,000 earlier) as we roll forward to CY14. We downgrade to REDUCE as the recent stock run up, more than discounts CY14 earnings - stock is currently trading at 15.5x/12.9x CY13/CY14E EPS - expensive in our opinion. Both the RE and the VECV business now account for ~Rs 1,200 each of our target price.Institutional holding more than 40% 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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