Buy Eicher Motors; target of Rs 4260: Sharekhan

Sharekhan's research report on Eicher Motors

Q2FY2023 performance was slightly above expectations, with PAT beating estimates by 3.2%. Revenue, EBITDA, and PAT grew by 56.4% y-o-y, 74.9% y-o-y, and 76% y-o-y, respectively, in Q2FY2023. Management’s focus on refreshed and new launches in India and international markets, expanding export opportunities, and increasing addressable markets should boost 2W performance. Moreover, its CV business is expected to benefit from multi-year CV upcycle, widening product portfolio, and strong hold in niche segments. EML’s consolidated earnings would report a robust 48.3% CAGR over FY2022-FY2024E, driven by a 28.7% domestic revenue CAGR, 32% export revenue CAGR, and a 410-bps increase in EBITDA margin from 21.1% in FY2022 to 25.2% in FY2024E. The stock trades at 27.4x P/E and 24x EV/EBITDA on its FY2024E estimates.

Outlook

We maintain our Buy rating on Eicher Motors Limited (EML) with a revised PT of Rs. 4,260, led by success of new launches, robust export opportunities, and focus on profitable growth path.

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Eicher Motors - 14 -11-2022 - khan