BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
In Q1 FY24, Eicher Motors Ltd. exceeded expectations with a consolidated Ebitda margin of 25.6% (versus estimate 24.8%), driven by price hikes (~1.5% impact) and cost savings (0.8%).
We expect Ebitda margin to remain range-bound over the next few quarters as there is limited scope of price hikes due to stable raw material and increasing competition, coupled with the impact of weak mix.
We upgrade FY24E SA earnings per share by 5%, primarily due to higher ‘other income'. However, for VE Commercial Vehicles, there was a margin miss, leading us to moderate the margin assumption for the commercial vehicle business.
Valuation and view
Improving supply side, new product launches, and ramp-up in exports are expected to drive the next phase of growth for Royal Enfield. Consequently, we are building in for ~16% volume compound annual growth rate for RE over FY23-25E, resulting in a monthly run rate increasing to ~79,000/88,000 for FY24/25E (versus ~73,300 in H2 FY23 since Hunter launch). This, coupled with stable commodity prices, should help maintain steady margins and drive earnings CAGR of 24% over FY23-25E.
Valuations at 23.7 times/20.6 times largely reflect the expected volume recovery, but not the potential risk from the recent launches of Bajaj-Triumph and Hero-Harley Davidson in midsize motorcycles in India and global markets.
Hence, we reiterate our 'Neutral' rating, with a target price of Rs 3,600 (September-25E based SOTP). We value RE at 20 times and VECV at 10 times ebterprise value/Ebitda on FY25E.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
