Shares of Eicher Motors Ltd. jumped 6% on Wednesday to the highest in three weeks after UBS Research upgraded the automaker from 'neutral' to a 'buy' rating.
The brokerage has also raised the target price of the Royal Enfield maker to Rs 5,000 apiece from the earlier Rs 4,300 per share, implying a potential upside of 16%.
UBS expects that Royal Enfield's new 450cc liquid cooled engine platform, introduced with the new Himalayan 450, to address competition and growth concerns, especially with a strong launch pipeline in store. The brokerage added that new launches by rival companies did not ramp up volume meaningfully and are tracking well below guidance.
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Competition has not breached Royal Enfield's qualitative edge and exports will deliver strong double-digit growth in the medium term, UBS said. It forecasted an 18% compound annual growth rate in Ebitda over financial years 2024–26 and said the stock was trading at a 17% discount to peers.
On the NSE, Eicher's stock rose as much as 6% during the day to Rs 3,940 apiece, the highest since Feb. 28. It was trading 5.04% higher at Rs 3,904 per share, compared to a 0.09% advance in the benchmark Nifty 50 as of 9:32 a.m.
The share price has risen 32.75% in the last 12 months. The total traded volume so far in the day stood at 24 times its 30-day average. The relative strength index was at 57.3.
Nineteen out of the 41 analysts tracking the company have a 'buy' rating on the stock, 11 recommend 'hold' and as many suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 3.4%.
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