Eicher Motors Advance Despite Mounting Concerns Of Competition For Royal Enfield

Eicher Motors surged on Monday morning after the company reported in-line quarterly results. However, brokerages see intense competition for Royal Enfield that could affect the company's bottomline.

What Happened: Eicher Motors posted results for the quarter ended in March on Friday. The results were in line with market expectations.

The company's net profit soared 18% to ₹1,070 crore. The Royal Enfield maker's revenue rose 11.8% to ₹4,256 crore. The company also announced a dividend of ₹51 per share for the year. 

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Analyst Reactions: HDFC Securities reiterated its “reduce” call as they see the company's rivals increasing production to challenge Royal Enfield. The brokerage also revised the target price to ₹3,734 from ₹3,597.

The competition in the 250-300 cc has intensified as Harley Davidson in collaboration with Hero Motocorp and Triumph in collaboration with Bajaj Auto launched models at competitive price points to Royal Enfield. The analysts see the competitive aggression forcing Eicher Motors to reconsider its pricing and branding strategy, which could squeeze its margins. 

Nuvama Institutional Equities also maintained its “hold” call as they expect the company to underperform the domestic market. In the second half of FY24, Royal Enfield's volume grew by 6%, underperforming the industry’s overall growth of 24%. Nuvama expects a volume compound annual growth rate (CAGR) of 5% in the domestic market over FY24-FY26. Nuvama maintained its target price of ₹4,500.

Price Action: Shares of Eicher Motors were up by 1.12% at ₹4,710 in the morning session on Monday. 

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Posted In: EquitiesPrice TargetMarketsAnalyst RatingsMoversEicher MotorsRoyal Enfield