Broker’s call: Eicher Motors (Buy)

Posted on by

Target: ₹4,331

CMP: ₹3,914.80

Eicher Motors’ (Eicher) Q3-FY2024 operating performance came in line with estimates, while its bottom line missed estimates due to lower-than-expected other income. Revenue increased by 1.6 per cent q-o-q to ₹4,179 crore (vs. estimate of ₹4,134 crore) because of a 2.1 per cent q-o-q increase in ASPs as volumes were down by 0.5 per cent q-o-q. EBITDA increased by 0.3 per cent q-o-q to ₹1,090 crore (vs. estimate of ₹1,098 crore).

EBITDA margin contracted by 30 bps q-o-q to 26.1 per cent (vs. estimate of 26.6 per cent) on 10bps contraction in gross margin and lack of operating leverage. Other income declined 7.3 per cent q-o-q to ₹254 crore (against estimate of ₹280 crore). APAT declined by 2 per cent q-o-q to ₹996 crore (vs. estimate of ₹1,030 crore).

Soft commodity price trends and new product launches are supporting the operational performance. Management has indicated a rise in enquiry and bookings as its latest launched products are receiving a healthy response in the market. Export volumes are impacted due to macro headwinds in the overseas markets, while transportation costs are increasing in certain routes due to the Red Sea issue.