Rs 300 to Rs 3300: 10x multibagger return in 10 years! What's next for Eicher Motors?

Eicher Motors stock has been part of the NSE’s benchmark Nifty 50 Index since April 1, 2016. From trading around Rs 300 in August 2013, the multibagger stock is now hovering around Rs 3,300 mark. So, an amount of Rs 10 lakh invested in the shares of Eicher Motors ten years ago would have turned into Rs 1.1 crore today.

About Eicher Motors

Incorporated in 1982, Eicher Motors Limited is the flagship company of the Eicher Group in India and a leading player in the Indian automobile industry. It is the listed parent of Royal Enfield, the global leader in middleweight motorcycles. Royal Enfield made its first motorcycle in 1901.

Royal Enfield’s motorcycle line-up includes Interceptor 650 and the Continental GT 650, powered by a modern 648cc twin-cylinder engine. It also manufactures the Classic, Bullet and Thunderbird models in 350 and 500cc displacement and the purpose-built adventure tourer - Himalayan, powered by the new LS410 engine.

Eicher Motors on D-Street

Shares of Eicher Motors hit its 52-week high of Rs 3,886 on November 1, 2022, and a 52-week low of Rs 2,835 on March 28, 2023. It has recovered over 18.5 per cent from its recent lows.

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Eicher Motors: Q1 Performance

The company reported a 50 per cent year-on-year rise in consolidated net profit at Rs 918.34 crore for the June quarter compared with Rs 610.66 crore in the same quarter last year. The profit figure was aided by other income, which stood at Rs 243.21 crore for the quarter compared with Rs 48.66 crore in the corresponding quarter last year.

Revenue for the quarter rose 17.62 per cent YoY to Rs 3,912.07 crore from Rs 3,325.80 crore in the same quarter year. This was the fourth consecutive quarter of highest-ever revenue from operations and profits for Eicher Motors. EBITDA for the quarter came in at Rs 1,021 crore, up 22.8 per cent over Rs 831 crore on a yearly basis.

Eicher Motors: What's next?

Technical check: "Eicher Motors has been hovering near the cluster of its EMAs on the daily time frame, showcasing lackluster developments in the counter.  On the technical front, 3240 is likely to cushion any short-term blip, followed by the sacrosanct support of 3125," said Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One.

"While on the higher end, a sturdy wall of the bearish gap is placed around 3520-3546 in the comparable period. Hence, the stock is likely to hover within the mentioned range, and a decisive breakthrough would only dictate the next set of movements in the counter," Krishnan added.

According to Sunny Agrawal, Deputy Vice-President and Head of Fundamental Equity Research, SBI Securities, the stock is well placed in terms of risk-reward ratio. "The automobile sector could be up for a structural bull run over the next two to three years. One can ride this sector through auto OEM (Original Equipment Manufacturer) as well as auto ancillary," he added.

"Eicher’s performance in Q1FY24 was in line, while operating performance was supported by cost savings, the bottom line was supported by higher other income and offset the decline in income from joint ventures. Going forward the management is looking for healthy growth in CV industry in rest of FY24 and remain optimistic for the performance in premium motorcycle segment in domestic market," said ShareKhan.

"While the new competition in the premium segment would expand the market, Royal Enfield may lose market share due to its high base. Further, the management has been enhancing its focus on the electric two-wheeler project. It has multiple product launch pipelines to cater to customers in premium motorcycle segments," it added.

The brokerage firm has maintained a 'Buy' rating with a target price of Rs 3,855 on account of its leadership position in the premium motorcycle segment, rising premiumization and its focus on balanced growth.

Emkay Global believes Royal Enfield’s robust positioning (impressive legacy combined with modern-day reliability) and strong upcoming product pipeline (refer Exhibit 5) would help sustain the structural domestic franchise revival story (started last year with Hunter). This, along with ramp-up in exports, better mix and softer commodities, would drive 21 per cent FY23-26E EPS CAGR.

It has a 'Buy' rating on the stock with a target price of Rs 4000, suggesting an upside potential of 19 per cent.

Disclaimer: The stocks mentioned in the story are for information purposes only. Investors or market participants should consult their financial advisors before taking any position.

 

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