Eicher Motor 3Q results lead to fall in share price by 4%

Eicher Motors share price fell by 4% during intraday trading on Friday 11th February, only a day after the two-wheeler and commercial vehicle maker announced earnings which were below the expected level for the quarter ended December 2020.

Consolidated profit increased by 6.8% year-on-year (YoY) to Rs 532.6 crore in Q3 FY21 held up by the Royal Enfield segment but hit by higher input cost. Consolidated revenue from operations rose by 19.3% YoY to Rs 2,828.3 crore in Q3 FY21 due to higher volumes.

Eicher Motors accounted for a 9% YoY growth in Royal Enfield’s volumes to over 1.99 lakh units and approximately 3% increase in VECV volumes to 12,800 units in Q3 FY21.

Quarterly earnings were lower than analysts’ expectations. A CNBC-TV18 analyst poll pegged consolidated profit at Rs 550 crore on a revenue of Rs 2,867 crore.

The stock was trading at Rs 2,789.55, down by Rs 109.55, or 3.78%. It has peaked at an intraday high of Rs 2,860.00 and stooped to an intraday low of Rs 2,706.35.

Global research firm CLSA has maintained a “sell” call on the stock with the target at Rs 2,450 per share. It believes that valuation is premium — 51-62% over Hero MotoCorp and Bajaj Auto — which is not feasible for a long period. According to a CNBC-TV18 report, it has increased FY21-23 EPS forecast by 2-3%.

UBS has kept its neutral call on the stock with the target at Rs 2,900 per share. It is of the opinion that Q3 numbers were in-line but the order book is failing. The company does not anticipate the price hike to fully offset rising commodity pressures in Q4. UBS believes that valuations are rich at current levels.

Domestic research firm Motilal Oswal has continued to keep buy on the stock. It is of the view that the recently launched Meteor and upcoming products would help expand addressable markets and drive the next phase of growth for RE. The stock trades at 29.7x/23.7x FY22E/FY23E consol.

Prabhudas Lilladher has an “accumulate” rating on the stock with a price target of Rs 3,129 against Rs2,901. It raised FY22/23 consol EPS by 5.8 percent/8.8 per cent on the upgrade of VECV volumes by 8-10 per cent for FY22/23 each and margins by 2-2.5 per cent, while keeping SA EPS stagnant.

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