Buy Eicher Motors; target of Rs 5665: Geojit Financial Services

Geojit Financial Services research report on Eicher Motors

Eicher Motors Ltd (EML) manufactures motorcycles and accessories under the Royal Enfield brand. It also has a joint venture with AB Volvo, Volvo Eicher Commercial Vehicles (VECV). Eicher motors reported an 18.8% YoY revenue growth, reaching Rs. 4,888cr, driven by strong performance in the motorcycle segment and higher sales volume in VECV. In Q3FY25, total sales of Eicher trucks and buses grew 1.2% YoY to 20,305 units, driven by a 12.3% increase in Light and Medium Duty (LMD) bus sales to 3,151 units and 44.5% surge in exports to 1,192 units. In Q3FY25, Royal Enfield reported a 19.4% YoY growth in motorcycle sales for models with engine capacities up to 350cc and above, reaching a total volume of 272,297 units. In addition, the company's international business demonstrated exceptional growth, surging 106.2% to 30,284 units, driven by strong global demand. The company’s financial performance has been robust, with EBITDA increasing 10.2% YoY to Rs. 1,201cr, driven by strong top-line growth. However, the EBITDA margin contracted 190bps YoY to 24.6%. Reported PAT increased 17.6% to Rs. 1,171cr, supported by strong revenue growth.

Outlook

Therefore, we have upgraded our rating on the stock from HOLD to BUY, with a rolled forward target price of Rs. 5,665 based on the sum-ofthe-parts (SOTP) valuation.