Eicher Motors Ltd. share price target

EIM's 2QFY21 performance has been strong, especially considering it was trailing in terms of volume recovery due to supply-side issues. Despite cost inflation (BS6 & precious metals), gross margins per unit were stable YoY. Strong booking and inquiries, positive initial response to Meteor, and normalized production would support volume recovery going forward. We upgrade FY21/FY22 consol. EPS estimates by 7%/8% as we upgrade volumes and realization for both RE and VECV. Maintain Buy....

We revise our rating from BUY to HOLD and upgrade our TP to Rs. 2,500 (Rs 2,400 earlier), valuing RE standalone business at 25x FY23E P/E (Rs 2,276) and VECV Business at 9x FY23E EV/EBITDA (Rs 224).

EIM consol results exceeded our estimates as Revenue/EBITDA/PAT were higher by 4%/22%/10%. This was led by, 1) better margins at RE at 22% (PLe 18.7%, -260bp YoY) and VECV at 6.9% (PLe 5%, +150bp YoY). We expect ~50bp contraction in margins in 2H as higher RM cost will be partially diluted...

Eicher Motors (EIM) reported in-line Q2FY21 revenue and a slight beat on EBITDA margins (22.8% vs. 21.4% est.), led by better operating efficiencies.

Q2FY21 results were subdued due to lower volumes, but came in above estimates. Revenue was marginally lower by 3% yoy at Rs21.3bn (est.: Rs21.8bn). EBITDA margin contracted 260bps to 22.1%, but was better than expectation of 18.7%, owing to betterthan-expected gross margin and lower Other expenses. We expect 2W volumes to rebound strongly, aided by ramp-up in production, healthy order-book, aggressive launches and focus on network expansion. Volume CAGR is...

Seminal year for industry provides interesting insights However, amid all the gloom, the engineering and production prowess of the industry (along with its value chain) shone brightly as it successfully completed the world's fastest switchover to Euro 6 equivalent emission norms i.e. BS-VI as per schedule. Much of the post festive period was focused on the transition, with the entire ecosystem estimated to have spent ~| 70,000 crore towards the technological leap. Covid-19 crisis struck India in the run up to April 2020, just as the changeover...

We are initiating coverage on Eicher Motors Ltd (Eicher) with a HOLD recommendation and a Target Price of Rs 2,400, which implies ~7% upside from the current levels

EML retains strong financial strength, possessing a net cash positive B/S with cash and liquid investments on books worth | 6,807 crore as of FY20 (i.e. ~11% of current market capitalisation). The company has historically demonstrated excellent capital efficiency (~18% RoCE as of FY20) in addition to a negative net working capital cycle and best-in-class margins (~24% as of FY20). Core financials, while still healthy, are expected to reach...

Eicher Motors posts net loss of Rs 55 crore, misses Street estimates For the quarter ended June 30, 2020, Eicher Motors' total revenue from operations was recorded at Rs. 818 crores, down by 66% as compared to Rs. 2,382 crores in the corresponding quarter of FY 2019-20; PBIDT was Rs. 52.52 crores as compared to Rs. 755.52 crores in the same quarter of the previous financial year. Royal Enfield sold 58,383 motorcycles in the quarter, a decline of 68% from 181,966 motorcycles sold over the same period in FY 2019-20....

Export opportunities and upgradation of consumer preferences will build strong growth over long-term. However, given short-term uncertainties, remain cautious on the stock and reiterate our HOLD...