₹1.22 to ₹3,207: Bluechip stock turns ₹1 lakh to ₹26.28 Cr in 23 years
With a market valuation of ₹87,869.10 crore, Eicher Motors Ltd. is a large-cap, blue-chip corporation that operates in the auto industry.
PremiumWith a market valuation of ₹87,869.10 crore, Eicher Motors Ltd. is a large-cap, blue-chip corporation that operates in the auto industry. The flagship company of the Eicher Group in India and a major force in the country's automotive market is Eicher Motors Limited. The parent company of Royal Enfield, the market leader in modern classic bikes, is Eicher Motors Limited (EML). In addition to manufacturing motorcycles, the Swedish company AB Volvo and Eicher have a joint venture dubbed Volvo Eicher Commercial Vehicles Limited (VECV), which has spearheaded the modernization of commercial vehicles in India and other emerging countries. The shares of Eicher Motors Ltd. are the ideal illustration of a long-term investment that has generated crores for shareholders over the course of the previous 23 years.
Eicher Motors share price history
Eicher Motors Ltd. shares ended trading on Friday at ₹3,207.00 per share, up 0.96% from the previous close of ₹3,176.45. The stock price climbed from Rs. 1.22 on January 1, 1999, to the level it is at now, representing a multibagger return and an all-time high of 262,768.85%. Thus, if an investor had invested ₹1 lakh in Eicher Motors shares 23 years ago, it would currently be worth ₹26.28 Cr. The stock has gained 1.77% over the past five years and has climbed 28.49% over the past year. On a YTD basis, the stock has gained 17.96% so far in 2022. On the NSE the stock had touched a 52-week-high of ₹3,265.95 on 11-August-2022 and a 52-week-low of ₹2,159.55 on 08-March-2022 which indicates that at the current market price the stock is trading 48.50% above the 52-week-low.
Eicher Motors Q1FY23 results
Eicher Motors Limited reported total revenue from operations of Rs. 3,397 crores for the quarter ended June 30, 2022, a growth of 72% from Rs. 1,974 crores in the same quarter of FY 2021–2022. EBITDA increased by 128% year over year to Rs. 831 crores from Rs. 363 crores in the same quarter of the prior fiscal year. Profit after Tax (PAT) increased by 157% year over year to Rs. 611 crores from Rs. 237 crores during the same period last year. In comparison to the 122,170 bikes sold during the same period in FY 2021–22, Royal Enfield sold 186,032 motorcycles in Q1FY23, a growth of 52%.
Commenting on the performance of the company in Q1FY23, Siddhartha Lal, Managing Director, Eicher Motors Ltd., said, “We have had an excellent quarter to begin this financial year, Our international volumes continued to record consistent growth with more than 60% increase as compared to the previous year. We have registered the highest ever quarterly revenues and EBITDA on the back of record international sales volumes. We recently launched the exciting new, neo-retro styled roadster, the Hunter 350. We just concluded the global launch and first ride programme in Bangkok with the world’s top press. There was tremendous energy and a very enthusiastic response for the motorcycle. We are confident that the Hunter will usher in new audiences and newer geographies into the brand fold. VECV, our Commercial Vehicle Joint Venture with the Volvo Group, recorded its highest ever first quarter volumes. The quarter also witnessed the inauguration of the first electric city bus delivered to the city of Chandigarh."
Commenting on Royal Enfield’s performance, B. Govindarajan, CEO - Royal Enfield and Wholetime Director, EML said “Continuing to work towards our vision of becoming a truly global motorcycle brand, our growth momentum at Royal Enfield continues to remain promising, spearheaded by some fantastic numbers from our international markets. We recently launched the Hunter 350 to some spectacular reception from Indian and global audiences. As we begin retail in India, we are confident that the Hunter 350 will open up a new market for us, thereby bringing in new customers to Royal Enfield. With products like the Scram 411 and the Hunter 350, we are building refreshed formats to experience pure motorcycling. With the upcoming festive season, uptick in market and consumer sentiment, and improvement in supply chain and part availability, we are confident about continued and sustained growth for Royal Enfield in forthcoming quarters."
Commenting on the performance of Volvo Eicher Commercial Vehicles Limited (VECV), Vinod Aggarwal, MD and CEO VECV said “With the Indian Commercial Vehicle Market on the recovery path supported by government spending in infrastructure and pent-up fleet replacement, there are huge opportunities in the market. It is heartening to note that we are developing well in all segments by following a customer-centric approach, expanding our distribution network reach, and broadening our product range. Margins remained under pressure in the quarter largely due to high inflation in a competitive marketplace."
Should you buy the shares of Eicher Motors?
The brokerage firm Motilal Oswal has said in a note that “Consolidated EPS to grow at 46% CAGR over FY22-24E; maintain Buy: We increase our FY23E/FY24E consolidated EPS by 3%/5% to reflect for easing commodity prices and operating leverage. Improving supply side, new product launches and ramp-up in exports will drive the next phase of growth for RE. This coupled with stable commodity prices will support margins and drive earnings growth. The stock trades at 28.9x/20.9x FY23E/FY24E consolidated EPS. Maintain Buy rating with a TP of INR3,600/share (Sep’24E SoTP)."
The research analysts of ICICI Securities said “EML stock price has largely been flat over last five years amid muted volume trajectory, underperforming the broader Nifty Auto index. We upgrade EML from HOLD to BUY amid affordable offering in premium segment (Hunter 350) thereby supporting volume growth over FY22-24E. We value EML at ₹3,650 on SOTP basis; assigning 30x PE to RE business & 30x PE to VECV business on FY24E numbers."
With attractive pricing for Hunter 350 (lowest price point offering by RE at ₹1.5 lakh/unit, ex-showroom), network optimisation & increasing global presence, we expect RE volumes to grow at a CAGR of 22% over FY22-24E, with CV cyclical upswing domestically, CV volumes at VECV are expected to grow at a CAGR of 21% FY22-24E amidst market share gains, overall on a consolidated basis, we expect net sales to grow at a CAGR of 22.1%. With operating leverage gains & stable input costs, margins are seen improving to 26.1% with consequent RoCE placed at ~21% by FY24E and continues to be net cash positive b/s with positive CFO generation, which are the key triggers for the stock’s future price performance as per the research analysts of ICICI Securities.
The research analysts of the broking firm Prabhudas Lilladher has said “Eicher delivered a positive surprise with consolidated EBITDA margin of 24.5% (+80bps QoQ) vs our estimates of 23.2%. RE has recently launched Hunter 350, which is expected to bring on board new customers owing to its attractive pricing (~ ₹1.5 lakhs for factory model) and differentiated product offering (light in weight, non-cruiser, urban fit). It delivered highest ever quarterly exports of ~29k units in 1QFY23 (vs ~25k in 4QFY22). 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."
“We maintain BUY on Eicher Motors as we anticipate (1) volume growth from new product launches (2) rising exports volume from channel expansion and market share gains and (3) margin expansion as operating leverage kicks in (we build in ~380bps EBITDAM expansion over FY22-24E). We increase our EPS estimates by 2/5% for FY23/24 and assign a revised SoTP based TP of ₹3,400 (at 28x FY24E EPS for standalone business vs 27x earlier to factor in positive outlook and 18x for VECV)," said the research analysts of Prabhudas Lilladher.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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