Buy Eicher Motors; target of Rs 5927: Microsec
Brokerage house Microsec is bullish on Eicher Motors and has recommended 'Buy' rating on the stock with a target price of Rs 5927 in its research report dated November 30, 2013.
December 03, 2013 / 11:35 IST
Microsec's research report on Eicher Motors
"Eicher Motors, Royal enfield has been the backbone of the growth story of Eicher Motors with its powerful product offerings in the form of 'Bullet', 'Classic' and 'Thunderbird' in the high end motorcyles segment ( 350cc and above). Royal Enfield recorded the best quarter in Q3CY13 with the record sales of 48, 242 units, a growth of 60.6 percent compared to Q3 of 2012 and that too at a time when the motorcycle market in India has been underperforming, posting a lower single digit growth in the year so far.""Eicher motors launched Continental-GT in india recently with the concept of Café-Racer bringing back an icon that introduces the spirit of one of the most popular motorcycling cultures in history priced at INR2.0-2.15 lakh (on road India) in the 535-cc segment. It will be lightest, fastest and most powerful Royal Enfield in production, which will be manufactured at its Oragadum plant.""Royal Enfield is eyeing various global markets, including Latin America and South East Asia to grow its international business, as it aims to become a significant player in the mid-sized motorcycle segment between the 250cc and 750cc category. Royal Enfield, currently exports only 3 per cent of its total production.""The CV industry has been in downtrend from the last 18-20 months which is expected to revive gradually from CY14E. Also the company is planning to launch new product ranges from 5 tons to 49 tonnnes of modern buses and trucks which are expected to drive its future growth."Valuation: "At the CMP of INR4687, the stock discounts its consolidated CY14E EPS of INR198.9 by 23.5x and its CY15E EPS of INR269.4 by 17.4x. Its 3 year and 5 Year Average P/E works out to be 22x as per Bloomberg.With Strong Iconic brand like Royal Enfield, Sound Business Model, Consistent Financial Growth , JV Tie-up with Volvo and Revival Expected in Commmercial Vehicles, Eicher Motors looks to be a good investment buy. We assign a multiple of 22x on its CY15E EPS of INR269.4 to arrive at a target price of INR 5927 (an upside of 26.5 percent) for a time horizon of 12- 15 months," says Microsec 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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