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Meanwhile, Kotak Institutional Equities has retained its ‘Sell’ view on the counter calling its volume trajectory below its expectations. Nuvama, however, reiterated a buy stance while slashing the target price.
The Royal Enfield motorcycle manufacturer on Tuesday reported a strong 34.4% year-on-year (YoY) growth in consolidated net profit for the quarter ended December to Rs 996 crore, and this was tad higher than an ETNow poll of Rs 969 crore. Consolidated revenue from operations rose 12.3% YoY to Rs 4,179 crore, which too, was above the estimated Rs 4,048 crore.
Read more: Eicher Motors Q3 Results: Cons PAT rises 34% YoY to Rs 996 crore, beats estimates
Here’s what brokerages said:
CLSA: Underperform | Target: Rs 3,906
CLSA has upgraded Eicher stock to ‘Underperform’ from ‘Sell’ and hiked the target price to Rs 3,906 from Rs 3,716. In its stock review, the brokerage said that the Q3 Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) was above its estimates and was led by lower marketing costs. The trend of strong demand for Volvo Eicher commercial vehicles (VECV) continues, it said. However, the market shares are expected to decline, the brokerage note said
Nomura: Neutral | Target: Rs 3,760
Nomura has maintained a neutral view on Eicher though it hiked the price target to Rs Rs 3,760 from Rs 3,640. The brokerage said that its Q3 earnings were in line with its estimates though the headwinds in the form of slowing retail sales and rising competition remain. Competition could impact more in FY25. Success of new launches can drive up ASPs further.
Nuvama: Buy | Target: Rs 4,400
The Q3FY24 earnings beat Nuvama’s expectations and it is of the view that Eicher will be able to maintain a healthy growth going ahead. It expects a revenue CAGR of 9% over FY23–26E driven by replacement demand, new products, and recovery in exports. Recent launches such as Meteor 650, Himalayan 450, and Shotgun 650 along with the upcoming line-up have the potential to support growth.
“The company has underperformed industry growth in recent months due to increasing competitive intensity and weak exports. Factoring in lower volume estimates, we are reducing FY25E/26E EPS by 4%/5%,” Nuvama note said.
It reckons the earnings CAGR to be at 17% led by expanding scale and better net pricing and retained ‘Buy’ with a target of Rs 4,400 from Rs 4,600 earlier.
Kotak Equities: Sell | Target: 3,000
Kotak called its Q3 quarter steady though it has reservations about the growth outlook of the company. Reiterating a sell, the domestic brokerage has increased the target to Rs 3,000 from Rs 2,900, earlier.
The volume trajectory remains below its expectations and the domestic demand trajectory has not witnessed any material uptick after the launch of Hunter 350 hence Kotak sees the >250 cc industry growth trajectory to remain below the Street’s expectations. In its view, the scale-up of Bajaj-Triumph and Hero-Harley will further moderate volume growth trajectory for the company.
On the export front, a muted outlook is seen in the near term, but Eicher continues to improve its profitability.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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