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Prabhudas Lilladher Report
We marginally trim our FY24E consolidated earnings per share estimate by 1% to factor in Q1 results and management commentary. Eicher Motors Ltd.'s Q1 FY24 consolidated Ebitda margin at 25.6% came 140 basis points above Bloomberg consensus (24.2%) and in line with our estimate (25.4%); margins expaned 110 bps QoQ given-
lower commodity prices,
price hikes,
inventorisation benefit, despite lower than-expected average selling prices on inferior mix.
Royal Enfield noted that festive season demand looked good and customer spending was coming back. On the commerical vehicle side, VE Commercal Vehicle Ltd. would benefit from continued profitable growth in the commercial vehicle industry.
Recent increase in competitive landscape has marred Eicher Motors' near to medium term growth prospects and rising competition could chip away Royal Enfield's growth volumes. However,
volume growth from new product launches,
focus on increasing export revenue mix,
higher mix of spares and merchandise revenue to aid both revenue growth and margin expansion.
Maintain ‘Accumulate' with a revised SoTP based target price of Rs 3,520 (at 23 times March-25E standalone earnings per share and 12 times enterprise value/Ebitda for VECV).
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