Accumulate Eicher Motors; target of Rs 30802: Dolat Capital

Dolat Capital's research report on Eicher Motors

Eicher Motors (EIM) posted highest ever top line at ` 25.5 bn (up 27.3% YoY) in Q1FY19 supported by RE volume growth of 22.5% with favorable product mix as compared to lower base in the same period in the last year. The favorable mix due to higher sales of premium products helped in improvement at margin levels, negating the adverse impact of increasing raw material prices. EIM posted gross margin and EBITDA margin of 48.5% and 31.8% respectively during the quarter. We believe increasing share of premium bikes in the sales mix will improve the margins further going forward. We have an Accumulate rating with target price of ` 30,802, valuing at multiple of 25x FY20E EPS.

Outlook With production capacity in place for RE and strong demand through increasing distribution expansion and new product launches, RE should sustain its growth momentum and increase profitability through better revenue mix. Export market potential is the focus area, but we expect that it will take some years to mature. CV cycle is expected to remain and VECV looks well equipped to play this opportunity with enhanced product profile and expanding distribution channel. We reiterate Accumulate with a target price of ` 30,802 based on 25x FY20E EPS on consolidated basis.

For all recommendations report, click here

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.

Read More