Eicher Motors Q1 Review: Brokerages Raise Target Prices On Demand, Capacity Expansion

Eicher Motors Ltd.'s June-quarter earnings reinforced brokerages' confidence in the Royal Enfield maker's growth outlook, with Citi, Goldman Sachs and Jefferies raising their target prices after the company reported a better-than-expected quarter and announced a major capacity expansion. Analysts said healthy demand, improving production, higher realisations and additional manufacturing capacity position the company well for sustained volume growth.

Brokerages said Royal Enfield continues to benefit from premiumisation, improving demand visibility and a recovery in production levels, while the newly approved greenfield plant in Andhra Pradesh is expected to support long-term expansion. Although some analysts flagged commodity cost volatility and valuation concerns, the consensus remained constructive on the company's earnings trajectory.

The company reported strong double-digit growth in revenue, operating profit and net profit during the June quarter, while EBITDA margin remained broadly stable from a year earlier.

Eicher Motors Q1 Highlights (Consolidated, YoY)

• Revenue rose 31.5% to Rs 6,632 crore from Rs 5,042 crore.
• EBITDA increased 32.2% to Rs 1,590 crore from Rs 1,203 crore.
• EBITDA margin stood at 24.0% versus 23.9% a year ago.
• Net profit rose 21.4% to Rs 1,463 crore from Rs 1,205 crore.

The board also approved Phase-I of a greenfield manufacturing facility in Andhra Pradesh with an investment of Rs 1,225 crore. The expansion is expected to add annual production capacity of up to 4.5 lakh motorcycles by FY30, supporting Royal Enfield's long-term demand outlook.

Brokerages said the additional capacity comes at a time when demand remains healthy, inventories have normalised and production constraints have eased, positioning the company for stronger volume growth over the coming yeaRs 

Here's What Brokerages Are Saying After Eicher Motors Announced Q1 Results

Citi

• Maintained 'Buy'; Target Price Raised To Rs 8,850 From Rs 8,350.
• June-quarter earnings were slightly ahead of estimates.
• Outlook remains positive.
• Capacity expansion remains on track.
• Commodity cost volatility remains a key monitorable.

Goldman Sachs

• Maintained 'Buy'; Target Price Raised To Rs 9,300 From Rs 9,100.
• Earnings beat expectations.
• Capacity expansion supports long-term demand growth.
• Production normalisation has helped inventories recover.
• Factors in steady demand visibility, price increases and capacity ramp-up.

Jefferies

• Maintained 'Buy'; Target Price Raised To Rs 9,300 From Rs 8,800.
• Delivered healthy growth despite cost pressures.
• Strong volume growth and capacity expansion support the outlook.
• Continues to benefit from premiumisation.
• Believes peak margin concerns are now behind.
• Says premium valuations are justified by the company's growth outlook and strong franchise.

Morgan Stanley

• Maintained 'Equal-weight'; Target Price At Rs 7,763 
• Stronger-than-expected average selling prices and tighter operating costs drove the EBITDA beat.
• Demand remains healthy and dealer inventory is low.
• Capacity additions could lift the second-quarter run rate by around 10% from the first quarter.
• Continued demand momentum could drive 4%-5% upside to FY27 EPS estimates.
• EV-related risks may limit further valuation expansion.

Macquarie

• Maintained 'Neutral'; Target Price At Rs 7,717 
• Gross margin missed expectations.
• Cost control helped offset margin pressure.
• Demand outlook remains constructive.
• Company remains well positioned from a volume growth perspective.

Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.