Religare's research report on Eicher MotorsEIM reported above-expected RE margins of 28.6% (RCMLe 27.5%) for Q4CY15 helped by a 250bps drop in RM costs, with PAT too surprising at Rs 2.4bn (RCMLe Rs 2.2bn). VECV margins however were flat QoQ to 7.4%, translating into consolidated margins of 15.6% (RCMLe 15.8%) and a consolidated PAT of Rs 2.7bn (RCMLe 2.65bn). With two new platform launches over the next two years (Himalayan 411cc motorcycle already unveiled in new platform), the traction in volume growth should continue. BUY; Mar’17 TP Rs 22,300.We largely maintain our estimates with a SOTP-based Mar’17 TP of Rs 22,300. EIM continues to have a healthy order book of 3-4 months and we expect revenue/PAT CAGR of 30%/47% over CY14-FY18E, with ROE of 38% and FCF generation of Rs 45bn over FY16E-FY18E. With two new platform launches over the next two years, we expect continued momentum in volume growth ahead. Maintain BUY.For all recommendations, 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.
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