Eicher Motors shares jump 7% on Q4 earnings. Should you buy, sell or hold?

Shares of Eicher Motors shot up nearly 7% in Friday's trade after the company reported better-than-estimated January-March quarter results on Thursday.

At 10:15 am, Eicher Motor stock was trading at Rs 3,605.90 on NSE, up 5.89%.

Eicher Motors reported a 48% jump in its consolidated net profit at Rs 905 for the fourth quarter, compared with Rs 610 crore in the same quarter last year. The profit was higher than ET Now Poll estimate of Rs 810 crore. Revenue from operations jumped 19% year-on-year (YoY) to Rs 3,804 crore, which too was higher than the poll estimate, which had pegged the figure at Rs 3,718 crore. The revenue was the company's highest ever and marked the fifth consecutive quarter of record revenues.


The company's board has also recommended a final dividend of Rs 37 per equity for the financial year ended March 2023. The dividend will be paid within 30 days from the date of shareholders’ approval.

Here's what brokerages recommend on the issue:

Jefferies: Buy | Target: Rs 4,000 | Upside: 17%
Jefferies retains a ‘Buy’ on Eicher Motors but the stock occupies a lower position in its pecking order.

The foreign brokerage pegs the price target at Rs 4,000 estimating a 17% upside from the last closing price. The target has been raised from Rs 3,800 valuing RE at 25X FY25E PE and the commercial vehicle business at 5X FY25E PB, the brokerage said.

“We continue to like Eicher as we see tailwinds of 2W demand recovery, industry premiumisation and growth in exports,” it said in a report.

The company finds a lower position in the preference order as Jefferies sees a fresh wave of competition. Its preferred 2W picks are TVS, followed by Bajaj and Hero.

Nuvama: Buy | Target: Rs 3,850 | Upside: 13% | View: 12 Months
Nuvama calls Eicher Motors a well-oiled machine, recommending a ‘Buy’. It expects a robust earnings CAGR of 19% over FY23–25E supported by the sales upcycle, market share gains and margin expansion. The domestic brokerage puts the SoTP-based target on 27X FY25E P/E for the 2W business and 20X FY25E P/E for the CV business.

Motilal Oswal: Neutral | Target: Rs 3,650 | Upside: +7%
Motilal Oswal has downgraded the stock to ‘Neutral’ and placed the target price at Rs 3,650. This is a 7% upside from the previous closing price. The valuation is at 24.5X/19.3X which largely reflects the expected volume and margin recovery, but not the potential risk from the upcoming launches of BajajTriumph in mid-size motorcycles in India and global markets, it said further. “Hence, we downgrade our rating to Neutral from Buy,” Nuvama added.

Kotak Institutional Equities: Cautious | Target Price: 2,900 | Downside: 15%
Kotak recommends a ‘Sell’ rating on Eicher Motors expecting a more cut-throat competition, going ahead.

“With expected launches from Bajaj-Triumph and Hero-Harley in the >250 cc motorcycle segment, the competitive intensity is expected to increase, which may weigh on the company’s growth prospects,” the brokerage noted.

Despite the launch of Hunter 350, the demand recovery in RE’s domestic portfolio (ex-Hunter) remained lacklustre due to higher upfront costs and key states continued to weigh on demand recovery.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)