Buy Eicher Motors; target of Rs 2900: Motilal Oswal

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Motilal Oswal's research report on Eicher Motors

Eicher Motors (EIM) reported in-line result, as the good performance of RE was offset by the miss in VECV. With supply chain issues likely to ease post2QFY23E, the continued product portfolio expansion will aid domestic recovery and support ramp-up in exports.

Outlook

We increase our FY23E/FY24E consolidated EPS by 5.5%/4.0% to reflect the better margins for RE and volume upgrades for VECV. Maintain BUY with a TP of INR2,900 (premised on Jun’24E SoTP).

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