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Eicher Motors’ growth outlook appears promising on the back of a pick-up in demand
Eicher Motors reported a 44.1 percent year-on-year decline in its Q4FY20 consolidated profit due to nationwide lockdown in second half of March and overall slowdown in auto business.
Royal Enfield volumes declined in the domestic market by 18 percent YoY and Volvo Eicher Commercial Vehicle by 45 percent YoY.
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) may fall around 30 percent YoY and there could be steep margin contraction.
Net Sales are expected to decrease by 12.3 percent Y-o-Y (down 11.3 percent Q-o-Q) to Rs. 2,112.7 crore, according to ICICI Direct.
While having an equal-weight rating, Morgan Stanely slashed its target for Eicher Motors by 20 percent to Rs 17,052 per share
Royal Enfield volumes declined by 19 percent YoY in Q1FY20 due to weak demand and high ownership cost.
Overall brokerages expect three-digit decline in operating profit margin for June quarter YoY.
Net Sales are expected to decrease by 5.4 percent Y-o-Y (down 3.6 percent Q-o-Q) to Rs. 2,410 crore, according to Kotak.
Net Sales are expected to decrease by 8 percent Y-o-Y (down 6.3 percent Q-o-Q) to Rs. 2,342.9 crore, according to Prabhudas Lilladher.
Volume growth was hit due to overall weakness and subdued customer sentiments in the auto sector led by rise in ownership costs because of mandatory long-term insurance and regulatory safety requirement.
Kotak expects consolidated adjusted net profit to decline 19 percent YoY led by weak performance of both Royal Enfield and VECV
Net Sales are expected to decrease by 4.9 percent Y-o-Y (up 2.7 percent Q-o-Q) to Rs. 2,405.2 crore, according to Prabhudas Lilladher.
Auto universe is expected to report a 28 percent YoY PAT decline on a modest base – a fourth consecutive quarter of double-digit PAT decline, Motilal Oswal said
Jefferies maintained its buy rating on Eicher Motors and slashed its target price to Rs 23,100 from Rs 27,100 earlier. The global investment bank also slashed its revenue estimates over FY19-21 by 2-6 percent.
In terms of Royal Enfield's quarterly performance, it registered volume decline of 5.9 percent on a YoY basis.
Net Sales are expected to increase by 10.3 percent Y-o-Y (up 3.9 percent Q-o-Q) to Rs. 2,502.9 crore, according to Motilal Oswal.
We continue to exude confidence in the company on the back of its dominant position in bikes with engine displacement above 250cc and a shift in customer preference towards premium products. The recent correction have made valuations attractive