Eicher Motors share price sheds 4% after Q3 results miss estimates

CLSA has maintained ‘sell’ call on the stock. with the target at Rs 2,450 per share. It is of the view that valuation is at premium—(51-62 percent over Hero MotoCorp and Bajaj Auto—which is unsustainable.

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Eicher Motors share price was down 4 percent intraday on February 11, a day after the two-wheeler and commercial vehicle maker reported lower-than-expected earnings for the quarter ended December 2020.

Consolidated profit rose 6.8 percent year-on-year (YoY) to Rs 532.6 crore in Q3 FY21 supported by Royal Enfield segment but hit by higher input cost. Consolidated revenue from operations grew by 19.3 percent YoY to Rs 2,828.3 crore in Q3 FY21, driven by higher volumes.

Eicher Motors recorded a 9 percent YoY growth in Royal Enfield’s volumes to over 1.99 lakh units and around 3 percent growth in VECV volumes to 12,800 units in Q3 FY21.

Quarterly earnings were lower than analysts’ expectations. A CNBC-TV18 analyst poll pegged consolidated profit at Rs 550 crore on a revenue of Rs 2,867 crore.

The stock was trading at Rs 2,789.55, down Rs 109.55, or 3.78 percent. It has touched an intraday high of Rs 2,860.00 and an intraday low of Rs 2,706.35.

Global research firm CLSA has maintained a “sell” call on the stock with the target at Rs 2,450 per share. It is of the view that valuation is premium (51-62 percent over Hero MotoCorp and Bajaj Auto), which is unsustainable. It has increased FY21-23 EPS forecast by 2-3 percent, according to a CNBC-TV18 report.

UBS has retained its neutral call on the stock with the target at Rs 2,900 per share. It is of the view that Q3 numbers were in-line but the orderbook is falling. The company does not expect the price hike to fully offset rising commodity pressures in Q4. UBS believes that valuations are rich at current levels.

Domestic research firm Motilal Oswal has maintained buy on the stock. It believes the recently launched Meteor and upcoming products would help expand addressable markets and drive the next phase of growth for RE. The stock trades at 29.7x/23.7x FY22E/FY23E consol. EPS.

Prabhudas Lilladher has an “accumulate” rating on the stock with a price target of Rs 3,129 against Rs2,901. It raised FY22/23 consol EPS by 5.8 percent/8.8 percent on the upgrade of VECV volumes by 8-10 percent for FY22/23 each and margins by 2-2.5 percent, while keeping SA EPS unchanged.

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