Eicher Motors hits new high; soars 18% thus far in Nov on healthy outlook

Despite the competitive pressure in Q2, Eicher Motors posted a healthy volume growth of 10.4% Y-o-Y basis to 248,831 units which supported by festive period and shift towards premium motorcycles

Shares of Eicher Motors, the manufacturer of Royal Enfield motorcycle, hit a record high of Rs 3,898, up 2 per cent on the BSE in Friday's intraday trade.

In the past one week, the stock has rallied 10 per cent on strong growth prospects of the company. Moreover, it has soared 18 per cent thus far in the month of November.

The stock surpassed its previous high of Rs 3,889.95 hit on November 1, 2022. A sharp run-up in the stock price of the company has helped Eicher Motors regain the Rs 1-trillion market capitalisation mark. At 10:49 AM, Eicher Motors' market capitalisation stood at Rs 1.06 trillion, BSE data shows.

In July to September quarter (Q2FY24), Eicher Motors' consolidated net profit increased by 55 per cent year-on-year (Y-o-Y) to Rs 1,016 crore, while total revenue from operations rose to Rs 4,115 crore as against Rs 3,519 crore in the year-ago period.

Despite the competitive pressure, the company posted a healthy volume growth of 10.4 per cent Y-o-Y and marginally on sequential basis to 248,831 units which was supported by festive period and shift towards premium motorcycles.

At VE Commercial Vehicles Limited (VECV), Eicher Motors said it has had the best-ever second quarter in terms of sales across all the segments.

The company continued on its sustainability mobility journey with deliveries of its electric buses to the customers and signed MoUs with leading e-commerce and mobility firms for supply of over 1000 electric trucks and buses.

Amid improved underlying demand trends (~14 per cent Y-o-Y growth in the ongoing festive season despite reasonable base post-Hunter), and expected multi-year upturn ahead in 2Ws post several years of struggle, analysts at Emkay Global Financial Services said that they continue to consider Eicher Motors as one of the top picks in autos (focused play on premium 2Ws, expanding its presence in the performance-oriented sub-segment with attractive valuations at ~19x its FY26E PER.

"The industry has seen gradual shift from 100-125cc range of motorcycles to 125cc+ motorcycles where the company has a strong presence. Despite the competitive pressure, the company has seen healthy volume growth in the domestic market indicating a strong brand value in the industry. Factoring this and premiumisation trend in the industry, we anticipate the demand momentum to continue for Eicher with volume growth of 7.8 per cent/6.8 per cent for FY24/FY25E," said analysts at Religare Broking .

Eicher has a strong foothold in the premium 250+CC 2-wheelers segment with a market share of around 33 per cent. The company would also focus on scaling up its international business while a rise in rural participation would aid in top line growth gradually.

"Industrial demand and governments push towards developing rural infra and improving urban infra as well as its plan to leverage its Stark Future investment toward electric vehicle (EV) would benefit the company's commercial vehicle segment which would further aid in top line growth," the brokerage firm said in result update.

Royal Enfield noted that festive season demand was good with a growth of around 15 per cent until now and both rural and urban market performed well. On the commercial vehicle (CV) side, VECV would benefit from profitable growth as peers work towards lowering discounts in the industry.

Recent increase in competitive landscape has marred Eicher Motors' near to medium term growth prospects and could chip away RE's growth volumes. However, volume growth from new product launches, focus on increasing export revenue mix, higher mix of spares and merchandise revenue should aid both revenue growth and margin expansion, analysts at Prabhudas Lilladher said in result update.