Buy Eicher Motors; target of Rs 5400: ICICIdirect.com
ICICIdirect.com is bullish on Eicher Motors (EML) and has recommended buy rating on the stock with a target price of Rs 5400 in its November 08, 2013 research report.
November 09, 2013 / 15:29 IST
ICICIdirect.com's report on Eicher Motors (EML)
"Eicher Motors' (EML) Q3CY13 results were ahead of our estimates on the topline, bottomline front. Topline at Rs 1736 crore was higher by ~17 percent QoQ while margins also improved ~210 bps QoQ aided by benign raw material prices and cost reduction measures. The performance from RE has been strong with highest-ever margin performance (19.3 percent) even as the as the new “Oragadam” facility ramps up. VECV's performance has also been admirable in a tough CV cycle, which has seen its peers slip to 1-2 percent margin profile. With the entire 5-49 tonne product line likely to be refreshed, we believe VECV should gain market share at the expense of incumbents. The RE business is a real gem in the domestic auto OEM space, with demand still outstripping supply. We expect the trend to continue, going forward, as demand for cruiser/luxury bikes grows in India as H-D and other international brands focus on the Indian market. On the valuations front, EML deserves premium valuations over peers on consistency of earnings and strong visibility.""Eicher has been justifiably commanding a premium over other auto OEs, with consistent delivery on earnings. With RE's business at full throttle and VECV likely to improve before too long, we ascribe RE a 20 percent premium to average industry P/E multiple and VECV a 30 percent premium to industry EV/EBIDTA multiple to arrive at an SOTP target price of Rs 5400. We maintain our bullish stance on the stock and recommend BUY," says ICICIdirect.com research report.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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