Eicher Motors' Q3 Results Beat Street Expectations, But Analysts See Future Pain For Stock

Shares of Eicher Motors were up on Wednesday after the two-wheeler maker posted better-than-expected third-quarter results, but brokerages issued caution calls and muted the target prices, citing persistent competition in the premium segment.

What Happened: In the third quarter, the maker of the Royal Enfield bikes reported a 34.43% year-on-year surge in consolidated net profit, reaching ₹995.97 crore, largely aided by a combination of higher volumes and price hikes across its product lines.

The company’s revenue from operations grew 12.28% to ₹4,179 crore in the third quarter, while operating margins surged to 26.08% from 23.03%.

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What Analysts Say: Global brokerage Morgan Stanley is “underweight” on the counter and has assigned a target price of ₹3,209. This implies a downside potential of 17% from the last close of ₹3,854. The analysts said that though the company posted a good set of numbers, slowing growth and greater competitive pressures supported its “underweight” rating.

Nomura has assigned a “neutral” call on the Eicher stock and a price target of ₹3,769, suggesting a downside of about 2% from the last close. Slowing retail and rising competition could hurt the stock more in FY25, analysts at the firm said. Nomura further added that the success of new launches can drive up the average selling prices further.

On the other hand, Jefferies has a “buy” call and a price target of ₹4,900 on the stock, reflecting an upside potential of over 27%. The brokerage believes the company should benefit from potential two-wheeler demand recovery and premiumisation. However, Jefferies also acknowledged that its sales could be see competition from Hero MotoCorp’s Harley Davidson and Bajaj Auto’s Triumph.

Price Action: Eicher Motors’ share price was up 0.53% at ₹3,874.45 around noon on Wednesday.

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