Morgan Stanley has retained its ‘Underweight’ rating on Eicher Motors, with a target price of ₹3,855 per share, citing weaker-than-expected Q3 earnings. The brokerage noted that the company missed EBITDA estimates due to a weaker product mix and increased promotional and launch-related expenses.
Despite this, Eicher Motors is focusing on growth over margins, a strategy that MS considers appropriate given the evolving market dynamics. However, the brokerage remains skeptical about the company’s ability to achieve both high growth and high margins simultaneously, particularly amid rising competition in the premium motorcycle segment.
Morgan Stanley has consequently lowered its EBITDA margin estimates for FY25-27, citing potential cost pressures and uncertainty surrounding demand recovery in key markets. The stock, which has already priced in high growth expectations, may face downward pressure if the company fails to deliver on its margin targets.
While Eicher remains a dominant player in the premium two-wheeler space, the brokerage believes that investors should remain cautious, given the challenging macroeconomic environment and ongoing cost pressures.
