Buy Eicher Motors; target of Rs 3625: Motilal Oswal

Motilal Oswal's research report on Eicher Motors

We met with the management of Eicher Motors (EIM) to get an update on the Royal Enfield (RE) business. Management sees stable demand in the domestic market and expects the next phase of growth to come from the ramp-up of Hunter in tier-3 and smaller cities. While EIM is witnessing a seasonal decline in export markets, it expects growth to be driven by the ramp-up in the portfolio and its reach in international markets. EIM will continue to launch new products to address demand in international markets and to give upgrade options to RE owners in India. Although the focus remains on profit growth over profitability, we believe there are levers for margin improvement in the near term.

Outlook

The stock trades at 21.7x/17.2x FY24E/FY25E consolidated EPS. We have a BUY rating on the stock with a TP of INR3,625 (Mar’25E SoTP).