Kotak Institutional Equities maintains ‘Sell’ on Eicher Motors, sees 28.9% downside

Kotak Institutional Equities has reiterated its ‘Sell’ call on Eicher Motors, with a target price of ₹3,600, highlighting concerns about the company’s valuation and near-term operational challenges. At 10:03 AM today, the stock is trading at ₹5,069.80, indicating a potential downside of 28.9%.

Key Insights:

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  1. Volume Growth Slowdown: Royal Enfield’s volume growth is expected to continue, albeit at a slower pace, reflecting muted demand in the two-wheeler segment.
  2. Margin Pressure:
    • Product Mix: A shift towards an inferior product mix could weigh on profitability.
    • Promotional Expenses: Increased promotional spending may also impact margins.
  3. Commercial Vehicle Segment: Weak industry demand is expected to adversely affect commercial vehicle (CV) volumes and margins.
  4. Valuation Concerns: Kotak notes that valuations remain expensive at current levels, limiting potential upside.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are advised to consult their financial advisors before making any trading or investment decisions.