3700% Payout: CLSA, Jefferies, 3 Other Brokerages Give Buy On Dividend King Stock Eicher, 26% Surge Seen

The maker of mountain bike Royal Enfield, Eicher Motors engines are all set to accelerate for the double-digit potential surge. The majority of brokerages are either NEUTRAL or have recommended BUY on Eicher shares on Wednesday. That comes after Eicher posts record performance across Revenue from Operations, EBITDA and Profit After Tax. After Q3 earnings, Eicher shares gained as much as 2% in the trading hours of February 14.

On BSE, Eicher shares ended at Rs 3,902.40 apiece, up by 1.2% with a market cap of Rs 1,06,838.15 crore. In the last 12 months, Eicher paid up to a whopping 3,700% dividends aggregating to Rs 37 per share. On the current market price, it has a dividend yield of 0.95%.

During the third quarter, Eicher recorded its highest-ever revenue from operations at Rs. 4,179 crores, up 12% compared to Rs. 3,721 crores in the corresponding quarter of FY 2022-23 and EBITDA was Rs. 1,090 crores, up 27%c compared to Rs. 857 crores in the same quarter of the previous financial year.

The company registered Profit after Tax at Rs. 996 crores, registering a strong growth of 34% in comparison to Rs. 741 crores during the same period last year. Also, the company's flagship Royal Enfield recorded sales of 229,214 motorcycles in the quarter, an increase of 4% compared to 219,898 motorcycles sold over the same period in FY 2022-23.

Going ahead, Siddhartha Lal, Managing Director, Eicher Motors believes the Himalayan on the new Sherpa 450 platform has the potential to change adventure touring around the world, and significantly grow the middleweight motorcycling segment. He added, "The new Himalayan won the Indian Motorcycle of the Year - IMOTY; 4th IMOTY in the last six years. At VE Commercials Vehicles, we recorded our best third quarter ever, with strong sales and improved market share across all business segments. We have recently announced our entry into the growing Small Commercial Vehicle segment with an Electric-First offer which will be available from 2025"

Brokerages like CLSA, Citi, Jefferies, Nuvama and Religare Broking have recommended buying Eicher shares with the highest target price seen at Rs 4,900, indicating a nearly 26% upside in the near term. Notably, Eicher also surpassed CLSA's target price on Wednesday.

Brokerages target prices on Eicher:

While upgrading to underperform on Eicher, CLSA raised its target price of Rs 3,906 per share with a positive outlook. Eicher has met this target.

Further, Citi, Jefferies and Nuvama maintained BUY on Eicher. Jefferies has set the highest target price on Eicher at Rs 4,900, while Citi set a target price of Rs 4,700. Both Jefferies and Citi also have a positive outlook on Eicher. However, despite maintaining a buy, Nuvama trimmed its target price to Rs 4,400 with a neutral outlook.

Meanwhile, in its research note, Religare Broking highlighted that --- 1) Parts business revenue for Volvo and Eicher combined was up by 22.3% YoY to Rs 560 Cr. 2) New launches; Himalayan 450 and Shotgun 650 are witnessing good response from customers with healthy bookings. 3) Consistent RE Hunter volume with ~265k since its launch in 2022. 4) The management expects the export market to remain under pressure for the upcoming 2-3 quarters. 5) Heavy Duty Truck and Light Medium Duty Trucks market share stood at 9.6% and 34.5% respectively. 6) VE powertrain sales were up by 8% YoY to 13,596 units. 7) The company aims to launch the new "Sherpa Engine" in the international market which shall aid in volume expansion. 8) The new launches in the upcoming quarters could keep the overhead expenses in a similar range.

On valuation, Religare's note said, "Despite the recent competitive pressure, EML continues to lead the 300+cc segment and has been posting volume growth consistently. The increased buying sentiments in the 125cc+ category and new launches in the upcoming quarters are expected to aid the company in terms of volume growth."

Also, Religare added, "Further, the rise in government expenditure on electrification of buses and rise in private capex shall aid in volume and revenue expansion in its JV VECV. Factoring this, we estimate its revenue/EBITDA/PAT to grow at a CAGR of 16.3%/19.9%/22.1% over FY23-FY26E and maintain our Buy rating with a revised (upwards) target price of Rs 4,661 valuing it at a PE of 24x on its FY26E EPS."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.