Royal Enfield bikes maker Eicher Motors share price rallies 7% after strong Q3 results. Should you buy the stock?

Eicher Motors share price rallied nearly 7% in early trade on Wednesday after the auto major reported strong Q3 results. Eicher Motors shares jumped as much as 6.78% to ₹7,791.00 apiece on the BSE.

The commercial vehicles and Royal Enfield motorcycles maker, Eicher Motors reported a 21.4% growth in its December quarter consolidated net profit at ₹1,420.6 crore from ₹1,170.5 crore in the year-ago period.

The company’s revenue from operations in Q3FY26 increased 23% to ₹6,114 crore from ₹4,973 crore, year-on-year (YoY)

At the operating level, EBITDA during the December quarter grew 29.6% to its highest-ever at ₹1,556.5 crore from ₹1,201 crore, EBITDA margin improved to 25.5% from 24.2%, YoY.

Royal Enfield recorded quarterly sales of 325,773 motorcycles, up 21% from 269,039 motorcycles in the year-ago period. VE Commercial Vehicles (VECV) recorded sales of 26,086 vehicles in the third quarter, up from 21,010 vehicles in the previous year.

Eicher Motors said its board of directors approved a proposal for capacity expansion at Royal Enfield, which will be achieved through a brownfield expansion at the Cheyyar manufacturing facility in Tamil Nadu, taking annual production capacity upto 20 lakh units from the existing 14.6 lakh units. The company is set to invest an estimated ₹958 crore for the brownfield expansion.

Should you buy Eicher Motors shares?

Nuvama Institutional Equities expects Eicher Motors’ volume momentum to continue, supported by strong acceptance of key models - Classic, Bullet, Hunter - and marketing push. It expects exports momentum to be robust led by a strengthening presence in existing markets and new products.

The brokerage firm forecasts a volume CAGR of 12% over FY26–28E. Factoring in higher volume assumption, it raised FY27–28 EPS estimates by up to 4%, and estimates revenue and earnings CAGR of 13% and 14% over FY26–28E.

Nuvama retained a ‘Hold’ rating on Eicher Motors shares and increased the target price on the stock to ₹8,100 per share from ₹7,700 earlier, based on FY28E PE of 30x for Royal Enfield and 25x for VECV businesses.

Motilal Oswal Financial Services (MOFSL) said that the robust domestic volume growth for Royal Enfield in FY26 so far has largely been a function of GST rate cut benefits. However, it noted that the demand seems to have now normalized after an initial surge in pent-up demand. Further, given that management would continue to focus on “growth over profitability,” it would mean that margin upside is likely to be capped from hereon.

MOFSL factors in Royal Enfield to post a CAGR of 16%, 16%, 14% in revenue, EBITDA and PAT over FY25-28E. Given the expected slower earnings growth, the brokerage firm sees no reason for the stock to trade at premium valuations.

Hence, it reiterated ‘Sell’ rating on Eicher Motors stock with a target price of ₹6,313 per share, valuing Royal Enfield at 26x December 2027E EPS and VECV at 11x EV EBITDA.

Eicher Motors share price has risen 3% in one month, and 13% in three months. The auto stock has rallied 37% in six months and jumped over 56% in one year. Eicher Motors share price has delivered multibagger returns of 142% in three years and 176% over the past five years.

At 9:55 AM, Eicher Motors share price was trading 6.44% higher at ₹7,766.05 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.