Eicher Motors shares skid 4%, hit over 3-month low

In past three months, the stock declined 16 per cent, against 1.5 per cent fall in the S&P BSE Sensex.

Shares of Eicher Motors, on Thursday, slipped 4 per cent to an over three-month low of Rs 2,384 on the National Stock Exchange (NSE) in intra-day trade as analysts remain cautious about the company's prospects, going ahead, both on the volume front as well as the margin performance on account of slowing demand momentum, commodity price impact and increasing competition in the premium motorcycle segment.

The stock of Eicher Motors, the listed parent company of Royal Enfield, is trading at its lowest level since December 22, 2020. At 12:44 pm, the stock was trading 4 per cent lower at Rs 2,390, and was the top loser among Nifty50 index, which was down 0.43 per cent at 14.442 points. In the past three months, it has declined 16 per cent, against 1.5 per cent fall in the benchmark index.

The recent trends indicate that Covid-19 cases are on the rise across states. In particular, the impact is steep in the state of Maharashtra, which has resorted to significant curbs from April 5 to April 30.

The two-wheeler (2W) segment (being a price sensitive in nature) started witnessing slower traction since last 3 months due to increasing fuel prices. Retail demand got impacted in second fortnight of March 2021 due to rising Covid-19 cases. Nonetheless, the sector remains structurally strong from long-term perspective due to low penetration and improving affordability, analysts at Reliance Securities said in auto sector update.

According to analysts at Nomura, for 2Ws, there is a risk of disruption, as electric vehicle 2Ws demand seems to be picking up. Ola Electric plans to launch its EV 2W by June 2021. Today, most high-speed EVs are priced at Rs 120,000 or higher. In case Ola is able to price its EVs at less than Rs 100,000, it could accelerate the shift towards EVs, which may impact scooter players, the foreign brokerage firm said.

Meanwhile, for January-March quarter (Q4FY21), Eicher Motors is expected to report a steady performance amid nearly flat Royal Enfield (RE) volumes quarter on quarter (QoQ) at 2.05 lakh units (up 26 per cent YoY & 2 per cent QoQ). EBITDA is expected at Rs 648 crore with margins at 22 per cent, down 180 basis points (bps) QoQ, driven by rise in key input costs, ICICI Securities said in the company's result preview.