Eicher Motors Ltd. share price target

Royal Enfield's (RE) Q4FY21 consolidated revenue was broadly in-line with our and consensus estimates whereas EBITDA was below our and consensus estimates on account of higher Raw material cost and other operating expenses. The falling covid cases and pickup in vaccination drive will help in normalizing the economic activity. We expect domestic 2W industry to see a double digit growth for FY22/FY23 on a low base. We build our volume growth estimates for FY22/FY23 to +18%/+15% factoring the strong recovery in 2W domestic market. We expect revenue/EBITDA/ earnings to grow at 14%/16%/17% respectively CAGR over FY20-FY23E with EBITDA margin of ~24.9% on...

For EML, we factor in 19%, 33.1% sales, PAT CAGR, respectively, in FY2123E. The company is seen delivering healthy double-digit volume growth in RE along with continued VECV outperformance, with margins undergoing a sedate recovery. We maintain HOLD and value EML at | 2,970 on SOTP basis...

Eicher Motors (EIM) reported in-line Q4FY21 standalone revenue of Rs 29bn, a 22% EBITDA margin and adj. PAT of Rs 4.7bn.

We revise our rating from SELL to HOLD and upgrade our TP to Rs. 2,450 (Rs 2,350 earlier), resulting in a downside of 6% from current levels.

impact), lockdown in Tamil Nadu (3 days plant closure). EIM 4QFY21 S/A and VECV performance were in-line. Adj. for one-offs expense of Rs250m (forex difference) S/A margins came in at 22.9% (-60bp QoQ, PLe 22.7%). S/A PAT came in-line at Rs4.9b (+1% QoQ). VECV results too were in-line with Rev/EBITDA/PAT at Rs36.5b/Rs3.2b/Rs1.3b. We believe EIM is well placed on its recovery ride with aggressive new product launch pipeline at RE and CV upcycle benefits at VECV. However, supply challenges...

Eicher Motors (EIM)'s 4QFY21 performance was in-line, supported by good volume recovery in both RE and VECV. Despite cost inflation, EBITDA margins per unit were stable QoQ. Good response to Meteor, upcoming launches of the new Classic, and normalized production would support RE volume recovery going forward. VECV is also firmly on the recovery path. We cut FY22E consol. EPS by 7%, accounting for the COVID impact on volumes and commodity inflation, while maintaining FY23E earnings estimates. Maintain Buy, with TP of INR3,200 (Mar'23 SOTP)....

Consolidated revenue increased 19.5% YoY to Rs. 2,809cr in Q3FY21 (+33.0% QoQ), with increased sales volume. Launch of Classic' in 2009 was an Inflection point for Royal Enfield, with that volumes grew by 32.0% CAGR during the period CY2010 to FY2020. However market share in India marginally declined to 25.0% in 9MFY21 (vs. 25.6% in 9MFY20). As of December 31st 2020, company has 989 large size stores and 900 studios stores across 1,550 cities in India. The recently launched Meteor 350 fetch positive response and the management expect similar response for all-new classic 350. Margin contraction with surge in commodity prices...

EBITDA stood at Rs 672 crore in Q3 FY21, growing 13% as against Rs 592 crore in the same quarter of the previous financial year. Royal Enfield sold 1.99 lakh motorcycles in the quarter, registering an increase of 5% from 1.89 lakh motorcycles sold over the same period in FY 2019-20. To bolster its presence in international markets, Royal Enfield announced entry into Japan with its first standalone, flagship store in Tokyo. Located in Suginami-Tokyo, the newly inaugurated store will have the complete suite of Royal Enfield motorcycles, apparel and accessories, in addition to spares and service. In addition to this, 13 new exclusive stores were opened with focus on Latin American...

EML said (1) present production run rate of 75,000 units/month is pretty much sustainable, (2) demand is returning from mature markets like Tamil Nadu and Maharashtra (share of top 10, 20 cities has come back to 25% vs. ~27%, 30%, respectively, pre Covid), (3) RE waiting periods is coming down with higher production levels but supply concerns and commodity spike costs remain, (4) it took 2-3% price hikes in January-February while more are likely in the offing to counteract cost pressures, (5) it added 43 new large format stores and 129 studio stores in Q3FY21 along with 13 exclusive stores...