Eicher Motors Ltd. share price target

Royal Enfield's (RE) Q1FY21 consolidated revenue/EBITDA was above our estimates while company reported loss vs our estimate of profit. Revenue/EBITDA was higher than our estimates on account of BSVI related price hikes and lower operating expenses while PAT was lower than our estimates due to lower other income and higher effective tax rate. We believe 2W industry is likely to decline in mid-double digit in FY21 however decline in premium segment could be lower on account of strong order book/enquiry levels from rural/semi urban areas. We believe RE being a discretionary product; we expect muted demand post lockdown, given likely erosion of purchasing...

This led to an increase in export share in total sales volume of 5.5% in FY20 (v/s 2.4% in FY19), mainly driven by the launch of 650cc Twins. It reflects the companys confidence in its new REs new mix of semi- synthetic oil helped it to extend the service and oil- change intervals for its Unit Construction Engine (UCE) based models It has brought down the in-use ownership cost of the motorcycles by The Make Your Own (MYO) program was launched in FY20 to enhance the customers purchase experience. The new vehicles are indigenously developed with two new engines (2L and 3L Operations for VECVs started operations at its new plant at Bagroda, near Bhopal, for the assembly of new engines for the Pro 2000 series with delivery expected in VE Powertrain (VEPT) engines sales declined 28.7% to 28,383 units. CFO from operations declined 30% to ~INR6b due to EBIT loss of ~INR83m (v/s ~INR5.98b profit), partially offset by lower tax and reduction in overall working capital.

Domestic CV industry remains beset by various demand side (soft economic activity, sluggish freight movement) and supply side (excess capacity, high installed base, stringency in financing) issues, with demand outlook yet to take a turn for the better amid missing green shoots. EML's exposure to the sector through 54.4% stake in VECV is likely to eat into expected improvement on the 2-W side and, thus, crimp overall profitability. We build | 72.3 crore as share of losses from VECV in FY21E and with recovery of CV...

Eicher Motors (EIM) Q1FY21 EBITDA/PAT number below our estimate. Revenue de-grew by 66% YoY to Rs.8.18bn led by 68% YoY fall in volume. EBITDA de-grew 99% YoY to Rs.38mn (vs est. Rs 646mn) with margin at 0.5% due to negative operating leverage. Enquiries and booking are almost back to pre-covid level for RE, however production was severely impacted due to frequent lockdowns in Chennai, affecting availability of products. Strong demand was witnessed in Tier 2/3 cities and rural areas, while demand in larger...

Eicher Motors (EIM) reported in-line Q1FY21 revenue but dismal operating margins at 0.2%, primarily due to higher input costs and lower operating efficiencies.

Volvo Buses India to integrate with VECV- The transaction will include tranfer of bus manufacturing facility at Hisakote, Bangalore and all employees. We downgrade EIM to Accumulate as we think recent valuation catch-up at 27x/23x FY22/23 EPS factors in near to med term positive. Structurally we remain positive on key factors such as 1) RE's under penetration in key motorcycling states (market share of <4% v/s national average of 6%) and 2) RE's monopoly for upgrade options in >300CC segment. In 1QFY21 EIM's...

Eicher Motors Ltd.'s quarterly profit fell as the nationwide lockdown that was imposed to contain the Covid-19 outbreak battered its already slowing sales. Net profit of the maker of Royal Enfield motorcycles fell 44% year-on-year to Rs 304.3 crore in the quarter ended March. Its sales fell by a fifth over the year-ago period during the three months ended March. In March alone, sales volumes fell 41%, in line with its peers. That also hurt the company's revenue, which dropped 11.7% to Rs 2,208 crore. OPM of the company stood at 18.94% compared to 27.39% in Q4FY19. As a result operating profits reported profit of Rs 418.17 crore compared to profit of Rs 684.69 crore. Other income...

~90% dealerships have resumed operations. However, expect some supply chain hinderance in the short run. BS6 retail sales were ~60% in 4QFY20. Adjusted for one-offs (recall and currency loss in exports markets) EIM consolidated performance were in-line with margins at 21.8% (-550bp YoY). This is a good margin performance in weak demand conditions. However, VECV performance looked weak with miss in margins at 1.8% (PLe 3.6%) and PAT loss at Rs260mn (PLe profit at Rs40mn). Going forward we believe...

14 June 2020 EIM posted the lowest EBITDA margins in six years due to one-off costs, the impact of BS6 cost inflation, and op. However, bookings have normalized, which is a positive surprise, although production ramp-up remains bottlenecked. New product launches would further aid demand. We cut FY21/FY22 EPS estimates by 29%/10% to factor slower production ramp-up for RE and challenges in VECV volumes. Maintain Buy, with TP of ~INR19,700 (Jun22 SOTP based). revenues / EBITDA / PAT declined ~12%/37%/44% to ~INR22b/INR4.3b/INR3b. INR135.5k) as 75% of Wholesale was BS6 models. as it did not entirely pass over the BS6 cost inflation. a) the recall of products in the US/EU and b) adverse Fx impact for LatAm subs. Also, employee cost was higher due to ESOP expenses.

Eicher Motors (EIM) reported in-line Q4FY20 revenue but disappointing operating margins at 20.8%, the lowest in the last eight quarters.