Eicher Motors shares surged more than 8% in early trading following the release of its Q2 results, buoyed by positive analyst reviews. As of 10:57 a.m., shares were up 8.02% to ₹4,957.25 on the BSE.
The parent company of Royal Enfield reported an 8% year-on-year increase in net profit to ₹1,100 crore, up from ₹1,016 crore last year. While profits rose, they fell short of market expectations, with EBITDA remaining flat at ₹1,087 crore, and revenue growing modestly by 3.6% to ₹4,263 crore.
Royal Enfield’s motorcycle sales in Q2 showed a slight decline, with 2.25 lakh units sold versus 2.29 lakh in the same quarter last year. Additionally, Eicher’s EBITDA margin contracted to 25.5% from 26.4%, underperforming the 29% market forecast.
Should You Buy?
Most brokerages responded positively, assigning a “Buy” rating.
– Nuvama upgraded Eicher to “Buy,” with a target price of ₹5,500, citing potential gains from robust festive demand for Royal Enfield, a focus on new models like the Classic and Bullet, and strengthened marketing.
– Jefferies shared similar optimism, setting a target price of ₹5,500, driven by a growing trend in premium two-wheeler purchases.
– Emkay Global raised its target price to ₹5,300, pointing to volume growth from new launches like the Bullet Battalion Black and festive demand.
– Citi noted Eicher’s pivot to volume growth over margins as a strategic response to increased market competition.
Conversely, Morgan Stanley rated Eicher “Underweight” with a target of ₹3,655, highlighting the challenges of missed earnings and competitive pressure. **Nomura** revised its rating to “Neutral” with a target of ₹4,391, acknowledging volume growth but noting margin constraints.
Overall, with 50% of 40 analysts recommending “Buy,” Eicher Motors stock appears appealing for investors looking at long-term growth, despite some near-term margin pressures.
