The shares of the leading manufacturer of commercial vehicles gained traction this week after Jefferies raised its ‘buy’ recommendation to an upside of 20 percent based on Wednesday’s trading price of Rs 3,450. 

At 10:52 a.m., on the National Stock Exchange, Eicher Motors Ltd shares were trading at Rs 3,450, down Rs 21.45 or 0.62 percent from the previous close. 

The company’s shares have delivered returns of 21 percent in six months and 7 percent on a year-to-date basis. 

The company’s revenue climbed by 17 percent year on year, rising from Rs 3,397 crore in Q1FY23 to Rs 3,986 crore in Q1FY24. During the same time period, net profit increased by 42 percent, from Rs 576 crore to Rs 817 crore. 

The Company’s Net profit margin increased from 15.69 percent in FY22 to 18 percent in FY23, while the operating margin rose from 20.98 percent to 24.32 percent during the same period. 

Based on an optimistic outlook on the automobile maker, Eicher Motors. Jefferies has raised Eicher’s price target to Rs 4,150, representing a 20 percent increase from Monday’s closing price. 

The rationale behind providing such a recommendation is 

● Jefferies analysts expect healthy growth prospects for Eicher Motors as a result of factors such as reduced competition worries, as well as tailwinds from two-wheeler demand recovery, industry premiumization, and exports. 

● According to analysts in 2023, there was a lot of rising competitiveness across the sector that weighed on the stock to underperform the auto index. Eicher Motors has been lagging the Nifty Auto Index by 24 percent. 

● Despite the new competition, Jefferies believes it will have a minimal impact on the company and that this is a good time to buy it because the stock price has dropped and they have alleviated all competitive issues. 

● During the FY23-FY26 period, the brokerage expects Eicher Motors’ earnings before interest, taxes, depreciation, and amortization (EBITDA), and earnings

per share (EPS) to expand by 62 percent and 81 percent, respectively. Eicher Motors Limited is a leading player in the Indian automobile industry and the global leader in middleweight motorbikes. The company is also involved in truck and bus operations, auto components, and technical consultancy services. 

Written by Omkar Chitnis


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