Hold Eicher Motors; target of Rs 10500: Emkay

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26 Aug, 2025 12:21

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Emkay's report on Eicher Motors

"EIM’s consolidated net revenue at Rs 22.5 bn (+35% YoY, +17% QoQ) was in-line with estimates. Consolidated EBITDA margin stood at 12.7% (+270 bps YoY, +110 bps QoQ) vs. est. of 12.4% with EBITDA at Rs 2.8 bn, 3% ahead of our estimates. RE business continue to surprise positively led by strong volume growth, better product-mix and operating leverage benefits. RE EBITDA was 9% ahead of estimates with EBITDA margin at 24.9% (+710 bps YoY, +180 bps QoQ). VECV EBITDA though, came in 6% lower than estimates with EBITDA margin at 6.6% (-100 bps YoY, +80 bps QoQ) against expectations of 7.0%. Consolidated net profit stood at Rs 1.6 bn - in line with estimates."

"We up our CY14/CY15 EPS estimates by 4%/20%, largely driven by enhanced capacity and stronger than anticipated volume/margins in both RE and VECV business. We remain structurally positive on the business but maintain that much of the positives are already discounted in the stock price. Even as we roll forward our TP to CY16, we see limited upside on the stock. Our CY16 SOTP based TP stands at Rs 10,500, where we value the Royal Enfield biz at 22x P/E (justified) by our DCF analysis, VECV biz at an early cycle multiple of 9x EV/EBITDA and MDEP biz at DCF value of Rs 295. The stock is currently trading at 40.5x/27.2x PER on CY14/15 estimates. We retain our HOLD recommendation", says Emkay Global Financial Services research.

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