
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:
- 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.
- Margin Pressure:
- Product Mix: A shift towards an inferior product mix could weigh on profitability.
- Promotional Expenses: Increased promotional spending may also impact margins.
- Commercial Vehicle Segment: Weak industry demand is expected to adversely affect commercial vehicle (CV) volumes and margins.
- 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.