Prabhudas Lilladher Gives Buy Call For Eicher Motors With Target Price Of Rs. 4,200

The auto sector of the Indian market has been outperforming most other sectors in the past few weeks, and most of the stocks that lead the auto sector are currently trading near their all-time highs. One of the leading large-cap stocks of the auto sector is Eicher motors, and recently in the latest report of Prabhudas Lilladher, the stock received a buy rating from the brokerage firm.

Prabhudas Lilladher is highly bullish on Eicher motors and has given a buy rating with a target price of Rs. 4,200. The stock is trending in the upside momentum and breaking its 52-week highs in the previous few trading sessions; however, the stock took a sharp dip in the market fall.

Here is a breakdown of the latest report of Prabhudas Lilladher on Eicher Motors.

Outlook of Eicher Motors

Eicher Motors Ltd is one of India's leading companies in the automobile industry. The 1982-founded Eicher Motors Limited is the Eicher Group's listed firm in India, a major player in the country's automotive market, and the world's top manufacturer of middleweight motorcycles.
The company is widely known for owning one of the oldest motorcycle brands, iconic Royal Enfield, which focuses on mid-cycle motorcycles. Some of the brands under Royal Enfield are Classic, Himalayan, and Bullet.

Outlook of Eicher Motors Stock

Eicher motors is a large-cap company with a market capitalization of over Rs. 96,084. The stock's current market price is Rs. 3,514, with a 52-week high of Rs.3,787 and a 52-week low of Rs. 2,159.

As per the fundamentals, the price to earnings ratio of the stock is currently 46.8. The Return on Equity of stock in one year is 14%, and Return On Capital Employed in one year is 18.3%. The stock is currently overvalued as per the book value, which is Rs.461.

Buy Call Of Prabhudas Lilladher On Eicher Motors

According to the latest report of Prabhudas Lilladher, "We increase our EPS estimates by 3.0/8.2% for FY23/24E and maintain 'BUY' rating with a revised SoTP based Target Price of Rs 4,200 (earlier Rs 3,400) at 28x Sep24E EPS for standalone business (Rs 3,758) and 12x EV/EBITDA for VECV (Rs 442; earlier 18x P/E). RE has positioned Hunter 350 as a youth product with attractive pricing (~50-60k lower than Classic 350) and differentiated features (light in weight, non-cruiser, urban fit), which will expand the customer base and attract first-time buyers (~50% of inquiries)."

The report's headline by the brokerage firm says, "Multiple growth drivers on the play."

Key Highlights of Prabhudas Lilladher Report On Eicher Motors

There are two different highlights of the report of Prabhudas Lilladher, "

• Hunter 350 attracts first-time buyers: RE's order book has witnessed a significant increase post the launch of Hunter 350. The model has a waiting period of 50-60 days as production is still in the ramp-up phase. RE's strategy of attracting new buyers seems to be playing out, as first-time buyers stand at ~40-50% of Hunter's sales. ~50% of enquiries are from young customers. Though margins in Hunter 350 are less compared to Classic 350, owing to aggressive pricing strategy of the company; incremental volumes from Hunter will aid blended margins. Hunter 350 is expected to cannibalize ~20-30% of Classic 350's volumes.

• Other highlights: Aug-22 proved to be one of the best month of FY23 YTD across dealerships, especially in western markets owing to Ganesh Chaturthi. Oct-22 volumes are likely to surpass Aug-22 volumes of ~70k units, owing to Dussehra and Diwali. Footfalls and enquiries are very strong. Other models excl. Hunter 350 don't have much waiting period."

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.