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Shares of Eicher Motors jumped to hit record high level of 3,261 apiece on the BSE in Thursday's trading session after the company posted strong earnings for the first quarter ended June, 2022. The company reported over two-fold increase in consolidated net profit to 611 crore, driven by robust sales in the international markets from 237 crore in the same quarter last fiscal. 

The auto major's revenue from operations rose to 3,397 crore during the April-June period as compared to 1,974 crore in the year-ago period. Meanwhile, Royal Enfield ended the first quarter with its best ever performance in the international markets with total dispatches of 28,390 units, an increase of 62 per cent over 17,493 units in the same period last year.

Brokerage Prabhudas Lilladher has maintained its Buy rating on Eicher Motors shares with target price of 3,400 apiece as it anticipates volume growth from new product launches, rising exports volume from channel expansion and market share gains and margin expansion as operating leverage kicks in (build in around 380 bps EBITDAM expansion over FY22-24E). 

“RE has recently launched Hunter 350, which is expected to bring on board new customers owing to its attractive pricing and differentiated product offering. It delivered highest ever quarterly exports in 1QFY23. We expect export business to witness significant growth over the next few years (we build in 30% volume CAGR over FY22-24E) led by channel expansion and market share gains. With new model launches in the pipeline, commodity cost moderation and chip supply stabilizing, we expect operating leverage to kick in. At VECV, demand continues to witness traction led by cyclical recovery," the note stated.

“With supply-chain issues getting resolved gradually, chip/ABS supply issues being taken care of, and Hunter launch coinciding with pre-festive season, we are building-in average volume of ~75k units/month for the rest of FY23E," said another brokerage ICICI Securities while maintaining buy on the auto stock with a DCF-based target price of 3,640 (earlier: 3,315). “The increase in target price is driven by 7% rise in FY24E earnings and valuation rollover by a quarter."

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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