Prabhudas Lilladher's research report on Eicher Motors
We marginally trim our FY24E/FY25E EPS estimate by <1% to factor in 4Q results and management commentary. Eicher Motors’ (EIM) 4QFY23 consolidated EBITDA margin at 24.5% came above BBG consensus (24%) but missed PLe (25.1%); margins expaned 150bps QoQ given (1) higher-than-expected ASPs on better mix, (2) lower commodity prices and (3) price hikes; despite de-inventorisation impact. Royal Enfield (RE) was an exception in auto space and didn’t see weakness on rural side. RE has planned multiple product launches over next 2 years, which should aid volume growth. On the CV side, VECV should benefit from continued growth in the CV industry. EIM remains our preferred pick in the 2W space as we anticipate (1) volume growth from new product launches, (2) higher export revenue mix, (3) increase in mix of spares and merchandise revenue to aid both revenue growth and margin expansion.
Outlook
Maintain ‘BUY’ with a revised SoTP based TP of Rs 4,030 (at 26x Mar-25E standalone EPS and 12x EV/EBITDA for VECV).
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