Eicher Motors on May 13 declared a consolidated profit after tax of Rs 610 crore for the quarter ended March 2022, up 16 percent from Rs 526 crore in the year-ago period. On a sequential basis, the growth in profit was 34 percent from Rs 456 crore in the previous quarter.
Eicher Motors 4Q net profit beats estimates. Eicher Motors reported net profit for the fourth quarter that beat the average analysts estimates. Net profit for the quarter rose 16% year on year to Rs 610 crore versus an estimate of Rs 596 crore. Revenue grew 9% from a year ago to Rs 3190 crore against estimates of Rs 3183 crore.The growth was led by YoY increase in average selling prices (ASPs) due to a richer model mix and price hikes taken over the past few quarters. This, however, was partly offset by YoY decline in volumes for Royal Enfield.
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Eicher Motors share price jumped over 5 percent in the morning session on May 16 after the company declared its Q4 earnings.
Eicher Motors on May 13 declared a consolidated profit after tax (PAT) of Rs 610 crore for the quarter ended March 2022, up 16 percent from Rs 526 crore a year ago. On a sequential basis, the growth in profit was 34 percent from Rs 456 crore in the previous quarter.
The maker of the iconic Royal Enfield reported a year-on-year (YoY) growth of 8.6 percent in its consolidated revenue at Rs 3,193 crore from Rs 2,940 crore in the corresponding period of the previous year. Sequentially, revenues rose 11 percent from Rs 2,881 crore in the December quarter. For the full year, from April 2021–March 2022, PAT jumped 25 percent to Rs 1,677 crore from Rs 1,347 crore in FY21.
Consolidated revenues rose by 18 percent to Rs 10,298 crore from Rs 8,720 in the previous financial year.
However, Royal Enfield registered record volumes in exports markets for the year marking a growth of over 108 percent over FY21.
“The year gone by was very significant for Eicher Motors Limited, as we registered considerable progress towards our long term strategic business vision,” said Siddhartha Lal, Managing Director, Eicher Motors Ltd.
“Over the last eight years, we have made concerted efforts in becoming a premium, global player, concentrating on some of the toughest motorcycle markets in the world, with an ambition to sustainably grow our overseas presence and business.”
At 9:56am, the stock was trading at Rs 2,547.65, up Rs 111.65, or 4.58 percent. It has touched an intraday high of Rs 2,571.85 and an intraday low of Rs 2,496.70. The scrip was trading with volumes of 21,081 shares, compared to its five day average of 16,743 shares, an increase of 25.91 percent.
The company approved a dividend of Rs 21 per equity share of face value of Re 1 each for the financial year ended March 31, 2022.
Global research firm UBS has a buy rating on Eicher Motors with target at Rs 3,100 per share, an upside of 21 percent from current level. The research firm is of the view that Q4 earnings was an all round beat with volume ramp-up ahead. It expects a sharp rebound in Royal Enfield volumes with 38 percent/12 percent growth over FY23/FY24 and sees upside risks to margin estimates of 22.9 percent/24.4 percent for FY23/FY24.
Brokerage firm ICICI Securities has retained buy on the stock with target of Rs 3044 per share, an upside of 19 percent from current market price. Eicher Motors’ EBITDA margin for Q4FY22 improved by 350bps QoQ to
23.7 percent primarily on account of 340bps QoQ improvement in gross margin with the benefit of operating leverage getting balanced by rising branding/marketing activities.
Led by improving chip supply along with strong booking momentum, Royal Enfield (RE) crossed 7 percent market share in the domestic motorcycle segment during the quarter (28.7 percent market share in below-125cc segment).
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We expect volumes to improve to average 65,000 units per month in FY23E (against 50,000 in FY22) along with 8% rise in ASP and 340bps improvement in EBITDA margin resulting in 55 percent YoY growth in EBITDA. We maintain buy on the stock with a target price of Rs 3,044 (earlier Rs 3,102), implying 24x FY24E EPS, it said.
Research and broking firm Motilal Oswal has has also retained buy call on the stock with target of Rs 2,900 per share. The near-term uncertainties due to supply chain issues notwithstanding, the expansion of product portfolio on new improved platforms will help Eicher Motors expand its addressable markets and drive the next phase of growth for Royal Enfield. The stock trades at 24.3x/18.7x FY23/FY24 consolidated EPS.
We cut our target P/E multiple for RE to 20x (from 23x earlier), to reflect: a) a lower sustainable growth in the domestic market, b) rising competition and c) the impact of increase in risk-free rate. We maintain buy with target of Rs 2,900 (premised on Jun’24E SoTP), the brokerage firm added.
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