Eicher Motors shares hit record highs 3,261 on the BSE in Thursday’s trading session after the company posted strong earnings for the first quarter ended June, 2022. Company registers more than two times growth in consolidated net profit 611 crore, driven by strong sales in international markets 237 crore in the same quarter of the previous financial year.
The auto major’s revenue from operations rises 3,397 crore during the period April-June as compared to 1,974 crore in the year-ago period. Meanwhile, Royal Enfield ended the first quarter with its best ever performance in the international markets with total dispatches of 28,390 units, up 62 per cent as compared to 17,493 units in the same period last year.
Brokerage Prabhudas Lilladher retains its buy rating Shares of Eicher Motors with a target price of 3,400 each as it expects volume growth from new product launches, increasing export volumes from channel expansion and market share gains and operating leverage in the form of margin expansion (building in about 380 bps abitdam expansion in FY22-24E) does.
“RE recently launched the Hunter 350, which is expected to attract new customers owing to its attractive pricing and differentiated product offerings. It delivered highest ever quarterly exports in 1QFY23. We expect the export business to witness significant growth in the next few years (we generate a volume CAGR of 30% in FY22-24E) led by channel expansion and increasing market share. With new model launches in the pipeline, commodity cost moderation and chip supply stabilizing, we expect operating leverage to kick in. In VECV, demand growth is observed to be led by cyclical recovery,” the note said.
“With the supply-chain issues gradually being resolved, chip/ABS supply issues being taken care of, and the Hunter launch coinciding with the pre-festive season, we are looking at ~75k units/s for the remaining FY23E. Monthly average volumes are building,” said another brokerage ICICI Securities while maintaining buy on auto stock with DCF-based target price 3,640 (before: 3,315). “The growth in target price is driven by 7% growth in FY24E earnings and a quarter by one valuation rollover.”
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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