Eicher Motors hits new summit on strong Q1 show, stock up 51% in 5 months

The company's net profit soared 157.5 per cent YoY to Rs 610.66 crore in Q1FY23, while total income surged 64.4 per cent to Rs 3,446.12 crore.

Eicher Motors jumped 3.3 per cent and recorded a new life-time high at Rs 3,260.85 on the BSE in Thursday's intra-day trade after the company reported a strong set of earnings for the June quarter.
 

The company's Q1FY23 net profit soared 157.5 per cent to Rs 610.66 crore for the quarter ended June 2022 when compared with Rs 237.13 crore in the corresponding quarter a year ago. Total income grew 64.4 per cent YoY (year-on-year) to Rs 3,446.12 crore.

At 10:31 AM, the stock was up 2.4 per cent at Rs 3,230 with trades of around 34,000 shares on the BSE. Meanwhile, the S&P BSE Sensex was up a per cent at 59,391.

Eicher Motors has rallied over 51 per cent from its early March low of Rs 2,159.55 in the last five months, as against a 6.5 per cent gain in the benchmark index.

Commenting on Q1 performance, Siddhartha Lal, Managing Director of Eicher Motors said, “We have had an excellent quarter to begin this financial year. Our international volumes continued to record consistent growth with more than 60 per cent increase as compared to the previous year. VECV, our Commercial Vehicle Joint Venture with the Volvo Group, recorded its highest-ever first quarter volumes. The quarter also witnessed the inauguration of the first electric city bus delivered to the city of Chandigarh."

Speaking on Royal Enfield’s performance, B Govindarajan, CEO of Royal Enfield said, “Continuing to work towards our vision of becoming a truly global motorcycle brand, our growth momentum at Royal Enfield continues to remain promising, spearheaded by some fantastic numbers from our international markets. We recently launched the Hunter 350 to some spectacular reception from Indian and global audiences. With products like the Scram 411 and the Hunter 350, we are building refreshed formats to experience pure motorcycling. With the upcoming festive season, uptick in market and consumer sentiment, and improvement in supply chain and part availability, we are confident about continued and sustained growth for Royal Enfield in forthcoming quarters."

Analyst at Nirmal Bang Institutional Equities said in a note, the company recorded its highest-ever sales in the international market in 1QFY23. We expect exports to clock 17 per cent CAGR over FY22-24E, aided by entry into new markets and market share gain in the existing markets. We expect exports to be one of the key growth drivers for Eicher over the medium term.

"We remain positive on Eicher's business prospects, owing to healthy growth and model launches. However, over the last one month, the stock has rallied by ~22 per cent. We believe that the current valuation has factored in the company’s positive business prospects and thus we have a cautious view on the stock. We downgrade Eicher to ACCUMULATE (BUY earlier). We value RE standalone at 25x Sept’24E EPS and VECV at 12x EV/EBITDA on Sept’24E to arrive at a target price (TP) of Rs 3,446.", the brokerage update added.