Shares of Eicher Motors, the manufacturers of Royal Enfield (RE) motorcycles, galloped in early trade by nearly 6 per cent to Rs 3930.35 at day’s high after the global brokerage UBS double-upgraded the stock to a buy and also raised the target to Rs 5000 from the earlier Rs 4300 per share.
The brokerage believes the company’s upcoming 450cc platform launch will address competition and growth concerns. Further, the brokerage said that the market is missing continued strength in RE’s addressable market, lacklustre response to competition and strong customer connect.
UBS forecasts a 10% domestic volume CAGR in FY24-26 for the company versus the industry’s 6-7%. Additionally, as the stock trades at a 20 per cent discount to Bajaj Auto as against a premium of 50 per cent over the past five years, the company’s finds the risk-reward compelling, especially since RE remains insulated from electrification risk.
Earlier the company on March released the business update for its unlisted subsidiary VE Commercial Vehicles.
In the December quarter, strong sales of Royal Enfield helped the company to post a higher-than-expected 12.3 per cent jump in revenue to Rs 4179 crore. Further, the company is expecting a revival in the exports of its RE motorcycle after struggling for nearly 2 years.
Technically, the stock is trading above its 30-day, 50-day, 100-day and 200-day SMA signifying long-term bullish momentum in the stock.
Also, the stock is trading at decent valuation with trailing twelve-month price-to-earnings of 28 which is below the industry median.
The consensus recommendation from 39 analysts for Eicher Motors Ltd is Hold, with 12 of them suggesting a strong buy on the stock. Furthermore, 1-year price target for the stock is Rs 4071, signifying 4 per cent potential upside, Trendlyne data shows.
Eicher Motors Limited is a company, which is engaged in manufacturing automobile products and related components. The Company operates in business verticals, including motorcycles, commercial vehicles and personal utility vehicles.