Eicher Motors shares tank 4% on September sales data; technical charts hint at more weakness ahead

Shares of Eicher Motors fell sharply in Tuesday's trade after the Royal Enfield maker's motorcycle sales slipped 4 per cent in September. The stock today slumped 4.43 per cent to hit a day low price of Rs 3,303 over its previous close of Rs 3,456.05. The counter has crawled 3.50 per cent higher in 2023 so far, underperforming the benchmark BSE Sensex's 7.09 per cent rise during the same period.

The bikemaker's total sales declined 4 per cent to 78,580 units in September 2023 as against 82,097 units in the year-ago period. The fall in international business was much deeper in September this year as it plunged 49 per cent to 4,319 units over 8,451 units in the corresponding period last year.

Market expert Ravi Singh said September month's two-wheeler report shows a decline of 4 per cent year-on-year (YoY) fall in the sales of Royal Enfield bikes in India, which is the Eicher Motors' biggest revenue earner.

On technical setup, analysts said the stock largely looked 'weak' on daily charts. Singh said the stock is in weak trend on daily charts and the RSI (Relative Strength Index) and MACD (Moving Average Convergence/Divergence) are suggesting more weakness ahead. The selling pressure may push the stock to Rs 3,000 level in coming trading sessions, he added.

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "The stock dragged towards the 200-SMA (Simple Moving Average) on the daily charts. The counter has been hovering in a narrow zone in the last couple of trading months, showcasing a lackluster development. On an immediate basis, Rs 3,250 is likely to cushion the fall, while sacrosanct support lies around the recent swing low of Rs 3,125. On the flip side, the stock has a sturdy hurdle of a bearish gap placed around the Rs 3,520-3,550-odd zone from a short-term perspective."

AR Ramachandran from Tips2trades said "Eicher Motors looks bearish on the daily charts with strong resistance at Rs 3,416. A daily close below support of Rs 3,280 could lead to target of Rs 3,145 in the near term."

The counter traded lower than the 5-day, 10-, 20-, 30-, 50-, 100-day simple moving averages (SMAs) but higher than the 150-day and 200-day SMAs. The counter's 14-day relative strength index (RSI) came at 42.78. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 31.99 against a price-to-book (P/B) value of 7.34.

The scrip has an analyst target price of Rs 3,668, Trendlyne data showed, suggesting a potential upside of 10 per cent. It has a one-year beta of 0.89, indicating low volatility on the counter.

On BSE, around 30,000 shares changed hands today. The figure was double than the two-week average volume of 15,000 shares. Turnover on the counter stood at Rs 9.51 crore, commanding a market capitalisation (m-cap) of Rs 91,443.27 crore.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

Also read: Stock recommendations by share market analysts for October 3, 2023: Hero MotoCorp, L&T Finance, Dr Reddy's, Exide & Hindustan Oil

Also read: Top 10 stocks to watch on October 3, 2023: Adani Energy, Suven Pharma, Hero MotoCorp, Maruti, MCX, Delta Corp & others

Also read: JSW Infrastructure shares and Vaibhav Jewellers shares listing today in Top News on October 3: Share markets outlook, Valiant Laboratories IPO to close, price hike for Hero MotoCorp bikes, scooters