Religare's report on Eicher Motors"EIM continues to dominate the premium motorcycle market with its iconic Royal Enfield brand - we expect a robust 33% volume CAGR over CY14-FY18 as the business builds on its “cult” status and unassailable market position. CV volumes too are expected to post a healthy 19% CAGR as benefits from a cyclical demand recovery and premium launches kick in. Valuations are appealing and the recent correction offers a good entry point for investors.""With strong volume momentum in the RE business and higher CV margins, we expect EIM to post a revenue/PAT CAGR of 30%/50% over CY14-FY18 and ROE expansion from 27% to 39%. EIM’s share price surged 75% YoY till early Aug’15 before correcting 20% in the past month and is now trading at 27x FY17E earnings. We see strong upside potential and value EIM at Rs 22,500 as follows: (1) RE at Rs 19,450 based on 33x fwd P/E - a premium to peers due to its superior earnings, margin and returns profile, (2) VECV at Rs 3,050 on 10x fwd EV/EBITDA. BUY for a target price of Rs 22,500", says Religare research report.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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