One of the large-cap and blue-chip companies with a protracted track record of reliable financial success is Eicher Motors. The firm operates in the consumer discretionary sector and has a market capitalization of ₹93,569.71. The Royal Enfield trademark is licensed by Eicher Motors, which is also the name of the group's main business in India and a dominant figure in the country's automobile sector. The shares of Eicher Motors are among the multibagger stocks that have made investors crorepati in a long-term investment, let’s know-how.
Eicher Motors Ltd. shares ended trading on the NSE on Friday at ₹3,429.40 a piece, up 0.52% from the previous close of ₹3,411.60. 1,038,097 shares were traded in total during the trading day, vs 1,258,822 shares on average over the previous 20 days. The stock price has gone up from ₹1.22 on January 1, 1999, to the present market price, which marks a multibagger return and an all-time high of 280,998.36% over the past 23 years. Therefore, if an investor had purchased Eicher Motors shares worth of ₹1 lakh 23 years ago, the investment would today be worth ₹28.10 Cr.
The stock has gained by 5.14% over the past five years, but over the past three years, it has produced a multibagger return of 110.48%. The stock has gained 22.36% over the past year, and it has climbed 26.14% YTD in 2022. In the past six months, the stock has appreciated 42.33%, and in the past month, it has climbed 9.02%. The stock recorded a 52-week high of ₹3,513.70 on the NSE on August 25, 2022, and a 52-week low of ₹2,159.55 on March 8, 2022; at the current market price, the stock is trading 2.39% below the high and 58.80% above the low.
Eicher Motors recorded net sales of ₹3,397 Cr on a consolidated basis, up from ₹1,974 Cr in Q1FY22 and representing a YoY rise of 72.10%. The company's total expenses increased 59.3% year over year, from ₹1,611 Cr in Q1FY22 to ₹2,566 in Q1FY23. EBITDA climbed by 129.0% YoY, from ₹363.0 Cr in Q1FY22 to ₹831.1 Cr in Q1FY23, according to the company.
Eicher Motors reported a profit before tax (PBT) of ₹758 Cr in Q1FY23 compared to ₹367 Cr in the same quarter last year which represents a YoY growth of 106.7%. In Q1FY23 the company reported a net profit or profit after tax (PAT) of ₹611 Cr which was ₹237 Cr recorded in Q1FY22 representing a YoY growth of 157.5%. From ₹8.7 Cr in Q1FY22 to ₹22.3 Cr in Q1FY23, the firm recorded an EPS growth of 157.5% YoY.
The research analysts of the broking company Sharekhan said on Thursday that “Eicher Motors Limited (EML) is well-poised to recover strongly and put performance in top gear, driven by an increase in addressable market size and better operational performance in the company’s twowheeler division. Further, the company’s CV business is geared up to significantly improve its contribution to consolidated PBT, led by expected market share gains, increasing synergies with the JV partner (Volvo) and operating leverage benefits. The recently launched new Royal Enfield (RE) brand, Hunter 350, is attractively positioned at a price tag of Rs. 1.5-1.8 lakh, given a differentiated style outfit, technology and loaded with contemporary feature."
“We believe Hunter 350 to boost Royal Enfield’s volumes and comprise 13-15% of the brand’s bikes in the medium term. EML’s performance was significantly impacted during the FY2020 to FY2022 from the peak volumes registered in FY2019, due to COVID-19 and a slower recovery witnessed in the premium segment. As the economy and supply constraints are normalising, we expect premiumisation to surge again in the two-wheeler segment, and expect Royal Enfield to outperform in the premium bike segment. Given a strong business outlook and robust earnings growth of 48.3% CAGR during FY22-24E, we initiate coverage on Eicher Motors with a Buy recommendation,” the research analysts claimed.
They further added that “Eicher Motors Ltd (EML) is well poised to show strong recovery in its overall performance, driven by its increase in addressable market size and improvement in operational performance in the two-wheeler (2W) division, while the CV division is expected to benefit from multi-year CV upcycle. Given a strong business outlook and robust earnings growth of 48.3% CAGR during FY22-24E, the valuation is yet to catch up with an expected recovery in performance, as the stock trades at a 20-25% discount to its historical average multiples, at 24.9x P/E and 21.7x EV/EBITDA on FY2024E estimates. We initiate coverage on the stock with a Buy rating and a 12-month PT of Rs. 4,100 by valuing the business at 28x its rolling-forward September 2024E EPS.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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