Shares of Eicher Motors jumped over 4 percent today after the company reported a stronger-than-expected performance for its fiscal second quarter. The maker of the iconic Royal Enfield motorcycles announced record revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA), with a net profit reaching ₹1,016 crore.
The company's stock traded higher at ₹3,657.00 on the National Stock Exchange following the announcement. Despite a product mix that was considered weaker, Eicher Motors managed to maintain a consolidated EBITDA margin of 26.4 percent. This was attributed to price hikes implemented in the first quarter and savings on raw material costs.
Royal Enfield, a unit of Eicher Motors, has been stirring up the premium bike segment with new launches such as the Himalayan 452cc and Super Meteor 650cc. Analysts are optimistic about the growth prospects from these recent introductions and additional products in the pipeline.
Despite its strong operational performance, Eicher Motors' stock has lagged behind the Nifty auto index by 20 percent this year due to competitive pressures. Nevertheless, analysts believe there is potential for a positive re-rating of the stock. They also express confidence in the long-term sustainability of Eicher's market share, driven by a recovery in demand for two-wheelers and an ongoing trend toward more premium products.
Jefferies and Nuvama Institutional Equities maintain a 'Buy' rating on Eicher Motors, setting target prices at ₹4,650 and ₹4,200 per share, respectively. The company is poised to gain from increased accessories revenue, further international expansion of Royal Enfield, and deeper penetration into Tier II & III cities.
Meanwhile, Morgan Stanley holds an 'Equal-weight' stance on the stock with a target price of ₹3,552 per share. Choice Broking has forecasted that Eicher Motors may experience healthy growth in FY24-26, indicating a bright future ahead for the company in both domestic and international markets.
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