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Motilal Oswal Report
Motilal Oswal has reiterated its 'Neutral' rating on Eicher Motors Ltd. with a target price of Rs 7,598 following the company's June-quarter results.
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The brokerage said domestic demand for Royal Enfield motorcycles continues to remain healthy, though margin pressures and an uncertain export outlook may limit near-term upside.
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Eicher Motors' Q1 FY27 consolidated profit after tax of Rs 1,460 crore was in line with the brokerage's estimates. While RE earnings were in line with estimates, VE Commercial Vehicles earnings came in 13% above estimates on the back of strong margin performance.
The brokerage projects Royal Enfield to record a 14% volume CAGR over FY26-28E and expects the domestic business to deliver a 15% CAGR, though exports are likely to post a much lower 5% CAGR, that too largely back-ended.
Given management's focus on volume growth and the recent surge in input costs, Systematix expect margins to remain under pressure. Overall, it expects Eicher Motors to post a 14% earnings CAGR over FY26-28E.
At 34 times/29.6x FY27E/FY28E, the stock appears fairly valued. Systematix reiterates Neutral with a target price of Rs 7,598.
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