This Automobile Stock To 'Buy' With +29% Return In 1 Year: Motilal Oswal

Target price

According to the firm Motilal Oswal, the current market price (CMP) of Eicher Motors is Rs. 2,522. the target price (TP) for the stock is Rs. 3,250, hence giving a +29% return in 1 year. Motilal Oswal has recommended investors to buy this stock. About the company's growth, the firm said, it's "Above our estimate; beat driven by higher realization."

Company performance

Eicher Motors reports a consolidated revenue/EBITDA/PAT growth of 5%/flat/9% YoY and 14%/29%/57% QoQ to ~ Rs. 22.5b/ Rs. 4.7b/ Rs. 3.7b. Their revenue/EBITDA/PAT also increased by 43%/75%/ 112% YoY in H1FY22. Standalone revenue increased by 3% YoY and 14% QoQ to Rs. 21.8b (beating Motilal Oswal's estimation of Rs. 18.95b), while gross margin declined by 130bp YoY (+40bp YoY) to 41% (est. 40%). They have doubled their revenue from accessories, and expanded their network in the international market, by adding 9 exclusive stores (149 outlets in total) and 3 new multi-brand outlets (over 650 stores). Eicher Motors also added 14 new studio stores (1,052 stores in total) and 20 large stores in the domestic market (1,053 stores in total).

Motilal Oswal's estimation

The firm said Eicher Motors' EIM's beat in performance has been driven by growth in RE realization and lower staff cost. With supply chain issues showing some signs of improvement, the company is expecting volume performance to be better in H2FY22. Export focus and revenue from accessories are also helping RE improve the company's realization.

According to Motilal Oswal's estimation, "We cut our FY22E consolidated EPS by 5% to account for lower volumes in FY22E while maintaining our FY23E earnings estimates. We maintain our Buy rating with a target price of Rs. 3,250/share (Mar'23E SoTP)."

Disclaimer

The above stock is picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.