Buy Eicher Motors; target of Rs 5335: Prabhudas Lilladher

Prabhudas Lilladher's research report on Eicher Motors

EIM’s consolidated revenue for Q1FY25 grew by 10.2% YoY, which was 1.7% higher than PLe/BBGe. The growth in revenue was driven by mix improvement in 350+cc segment, while the higher pricing of refreshed products is also reflected in the growth. Consequently, ASP grew by 7.3% YoY/1.9% QoQ. Consolidated EBITDA grew by 14.2% YoY, while margin expanded by 90bps YoY to 26.5%. Healthy overall performance coupled with 20%/74% YoY expansion in other income /profits from JV, lifted PAT higher by 20% YoY. YTD volume growth has been flattish due to heatwave, elections and increased competitive intensity, which led to customers delaying their buying. However, the management remains optimistic on delivering high single digit growth in FY25 aided by robust festive sales as well as new launches. The growth outlook in international business remains optimistic given the encouraging response towards new launches and expansion of its geographic presence.

Outlook

Factoring this, we estimate its revenue/EBITDA/PAT to grow at a CAGR of 15%/18%/19% over FY24-26E. We retain our ‘BUY’ rating with SoTP-based TP of Rs5,335.