Moneycontrol Bureau
Shares of Eicher Motors fell 3.7 percent intraday Thursday after the Royal Enfield maker slashed growth forecast significantly. It was in addition to 4 percent fall in previous session after CLSA downgraded the stock.
In an interview to CNBC-TV18, Siddhartha Lal, managing director and chief executive officer of the company said the manufacturing capacity of two-wheelers will increase to around 9 lakh units by 2018, but growth forecast is reduced from current 50-60 percent to more like 30-40 percent per year.
Earnings per share growth estimates are much lower than Citi's expectations of around 44 percent over CY14-FY18.
Yesterday, CLSA downgraded the stock to underperform from buy and slashed target price to Rs 20,400 from Rs 20,900 earlier as it believes the stock has fully priced in strong Royal Enfield outlook.
The brokerage says it continues to like long-term growth outlook and solid franchise of Royal Enfield but sees limited stock return potential after the recent rally. The stock gained 27 percent in last three months.
CLSA slashed FY18 EPS by 8 percent factoring in slightly lower volumes for Royal Enfield and lower margins for the commercial vehicle business.
Another negative for the company is that Delhi government has banned registrations of all two-wheelers that are not complied with BS-IV norms in the city, which will be effective from April 1, 2016. Currently two-wheelers are complied with BS-III norms and BS-III and BS-IV norms are applicable for passenger vehicles in India.
At 13:03 hours IST, the scrip of Eicher Motors was quoting at Rs 18,104.95, down Rs 597.70, or 3.20 percent on the BSE.Posted by Sunil Shankar Matkar
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