Buy Eicher Motors; target of Rs 26,727: Emkay Global Financial

Emkay Global Financial is bullish on Eicher Motors has recommended buy rating on the stock with a target price of Rs 26,727 in its research report dated August 13, 2020.

Broker Research

August 17, 2020 / 17:06 IST

Emkay Global Financial's report on Eicher Motors

Q1FY21 revenue declined 66% yoy to Rs8.2bn (estimate: Rs8.6bn). Net loss stood at Rs552mn, better than the estimate of –Rs1.3bn due to lower-than-expected losses in the CV division. We expect 2W volume recovery ahead, supported by a healthy order-book, new products and focus on network expansion. We expect a volume CAGR of 10% over FY20-23E. The market share in domestic 2Ws is likely to improve from 3.8% in FY20 to 4.4% in FY23E. New products remain a focus area, with expectation of one new model or major refresh every quarter for the next three years to support the widening of addressable customer base in domestic and overseas markets.

Outlook

We estimate revenue/earnings CAGR of 14%/17% over FY20-23, with average ROCE of 29%. We retain Buy with a TP of Rs26,727 (Rs19,954 earlier), based on 25x P/E for motorcycle business (20x earlier) on Sep’22E (20x Mar’22E earlier).

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