Deutsche Bank retains buy on Eicher Motors, expects EPS to grow at CAGR of 29%

November 16
01:05 2017
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Eicher Motors’ second quarter earnings missed analyst expectations on Tuesday. Standalone net profit increased 22.8 percent year-on-year to Rs 486.4 crore, aided by revenue and operating income.

Profit for year-ago quarter stood at Rs 396.2 crore. Revenue during the quarter also grew by 22.8 percent to Rs 2,164 crore, driven by price hikes and higher sales volumes.

Moneycontrol takes a look at the top research firms’ outlook on Eicher Motors

Brokerage: CLSA | Rating: Buy | Target: Rs 39,300

Global research firm CLSA has retained a buy on Eicher Motors with a target price at Rs 39,300 per share. Royal Enfield continued to perform well with EBITDA up 25 percent YoY. It is of the view that commercial vehicle business performance is also improving YoY.

CLSA believes that positive response to new products could provide an additional growth lever and continues to like its strong long-term growth outlook

Brokerage: Credit Suisse | Rating: Underperform | Target: Rs 26,600

Research firm Credit Suisse has maintained an underperform rating on Eicher Motors and has raised the target price to Rs 26,600 from Rs 25,600 per scrip. It believes that valuations of the company at 30x FY19E core earnings per share (EPS) are reachadding that new products need to succeed for current multiples to sustain.

The research firm is of the view that previous quarter’s results were in-line while margin expansion was below industry. It is of the view that for current valuations to sustain Eicher Motors will need new models to succeed.

Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 33,750

Global Deutsche Bank has maintained a buy on Eicher Motors and has cut the price target to Rs 33,750 from Rs 34,000. It is of the view that the company’s September quarter results were broadly in line with estimates.

The house expects volume growth to moderate in the next financial year due to capacity constraints and sees earnings per share to grow at a compound annual growth rate (CAGR) of 29 percent by March 2020.

Deutsche Bank further expects Eicher’s revenue growth and margins to outpace volume growth due to pricing power, and increasing share of spare parts/service revenues.

In an interview to CNBC-TV18, Vinod Aggarwal, MD & CEO-VE Commercial Vehicles, Eicher Motors said that the company is seeing traction in construction segment and that the commercial vehicle cycle is turning around.

At 09:46 hrs Eicher Motors was quoting at Rs 30,200.00, up Rs 116.80, or 0.39 percent. It has touched an intraday high of Rs 30,340.60 and an intraday low of Rs 30,046.95.

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