Axis Securities has buy call on Eicher Motors with a target price of Rs 4125. The current market price of is Rs 3732.45. Time period given by analyst is two years when its price can reach defined target.

Eicher Motors , incorporated in the year 1982, is a large cap company (having a market cap of Rs 101904.20 Crore) operating in the Auto sector.

Its key products/revenue segments include automobile – 2 wheelers, spare parts & components, allied products, other operating revenue, other services, scrap for the year ended March 31, 2022.

Financials

For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 3446.12 crore, up 4.07 per cent from last quarter total income of Rs 3311.34 crore and up 64.39 per cent from last year for the same quarter total income of Rs 2096.32 crore. The company has reported net profit after tax of Rs 576.88 crore in latest quarter.

The company’s top management includes Mr.Srinivasan Sandilya, Mr.Siddhartha Vikram Lal, Ms.Manvi Sinha, Mr.Inder Mohan Singh, Mr.Govindarajan Balakrishnan. Company has SR

& Co. LLP as its auditors. As on June 30, 2022, the company has a total of 27 crore shares outstanding.

Investment rationale
With robust demand, expansive product portfolio, easing supply chains, expanding distribution network, and rapidly growing international sales, the brokerage models volume growth of 19% CAGR FY22-25E. The volume growth will drive higher operating leverage, which along with the correction in commodity prices, should lead to EBITDA margin expansion (+510bps over FY22-25).

The brokerage rolls forward valuation from Mar’24to Sep’24 and upgrade rating on the stock from HOLD to BUY with a revised TP of Rs 4,125(Rs 3,120 earlier).

They value RE standalone business at 27x (from 24x earlier) on Sep’24 EPS (Rs3,675) and VECV at 12x EV/EBITDA (from 11x earlier) Sep’24 EBITDA (Rs 448), implying an upside of 11% from the CMP.

Promoter/FII Holdings
Promoters held 49.21 per cent stake in the company as of June 30, 2022, while FIIs owned 29.5 per cent, DIIs 10.14 per cent.

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