Analysts note that while Eicher Motors’ Royal Enfield (RE) brand faces growth hurdles, particularly with recent launches like the Himalayan 450 yet to gain major traction, the company’s overall performance indicates a positive trajectory. 

Analysts at UBS, for instance, said that a 21 per cent year-on-year (Y-o-Y) growth in Ebitda and a considerable surge in Ebitda per vehicle to Rs 50,000, underscores the company’s resilience.

Overall, Eicher Motors reported promising numbers, with profits surging over 31 per cent to Rs 983.3 crore in Q4FY24, compared to Rs 747 crore in Q4FY23. The company’s topline witnessed a 9.4 per cent Y-o-Y increase to Rs 4,192 crore in Q4FY24 from Rs 3,831 crore in Q4FY23.

Here’s what brokerage said:

HSBC | Hold | Target Price: Rs 4,500

HSBC’s outlook suggests that while Royal Enfield’s (RE) domestic volumes are anticipated to slightly outpace industry averages, considerable growth in market penetration is unlikely due to saturation levels in several high per capita income states. This saturation, attributed to rising vehicle prices, has persisted for the past few years. Notably, the introduction of Harley and Triumph motorcycles hasn’t cannibalised RE sales but rather attracted new customers to the premium cruiser segment. 

Maintaining a target price of Rs 4,500 and a ‘Hold’ rating, HSBC cites increasing competition in the domestic premium two-wheeler (2W) market as a factor. 

Downside risks, analysts said, include unsuccessful launches, declining demand for premium motorcycles, and competitive pricing strategies from rivals. Conversely, upside potential lies in improved semiconductor availability leading to accelerated production, strong traction for new launches, favourable margin performance, and unforeseen success in exports over the medium to long term.

UBS | Buy | Target Price: 5,480

Eicher Motors continues to rev up its performance, reporting another strong quarter that aligns with expectations. In Q4FY24, RE maintained its operational excellence, fuelled by volume and ASP increases.  Gross margin saw a 50 bps QoQ improvement, supported by a favourable product mix. 

In terms of valuation, with competition concerns easing and the 450cc roadster launch on the horizon, there is a slight upward adjustment in the target multiple for the motorcycle business to 19x 1-year forward EV/Ebitda. Additionally, the valuation is rolled forward by three months to Q1FY27E, resulting in a revised price target of Rs 5,480. VECV continues to be valued at 9x EV/Ebitda.

Overall, the outlook remains positive for Eicher Motors, with its strategic initiatives and strong performance positioning it for continued growth in both domestic and international markets, UBS said.

Nuvama Institutional Equities | Hold | Target Price: 4,500

Eicher Motors Q4FY24 results aligned with expectations. Recent product launches like the Meteor 650 and Himalayan 450 have garnered positive feedback, contributing marginally to overall volumes. 

Key risks identified include lower-than-expected growth in both domestic and overseas volumes, potential failures of new launches in the two-wheeler segment, spikes in commodity prices, and adverse currency movements.

“We expect underperformance to persist with a moderate volume compound annual growth rate (CAGR) of 5 per cent in the domestic market over FY24–26E, and are building in a revenue/earnings CAGR of 7 per cent/10 per cent. Our some of the parts (SotP) at Rs 4,500 (unchanged) factors in FY26E PE of 26x for RE and 20x for VECV businesses; retain ‘Hold’ on the stock,” Nuvama said.

Motilal Oswal | Sell | Target Price: 4,020

Despite a strong 24 per cent volume growth, VECV’s Ebitda margin remained stable quarter-on-quarter, which was unexpected. However, concerns about rising competitive pressures, both domestically and in export markets, cast a shadow over the company’s volume growth prospects.

Consequently, Motilal Oswal has revised down its EPS estimates for FY25E and FY26E by 4 per cent and 7 per cent respectively, anticipating margin pressure for Royal Enfield (RE) due to intensifying competition. Given the recent surge in the stock price, Motilal Oswal downgraded Eicher Motors from Neutral to Sell, with a revised target price of INR 4,020 based on the March 2026 estimated sum-of-the-parts (SoTP) valuation.

Kotak Institutional Equities | Sell | target Price: 3,400

Eicher Motors’ consolidated Ebitda fell short of expectations, primarily due to lower-than-anticipated average selling prices (ASPs) and higher employee expenses. 

The expansion of competitors’ distribution networks is expected to moderate volume growth for Eicher Motors.

Kotak has revised its FY2025-26 consolidated EPS estimates upward by 3-4 per cent, mainly due to higher other income assumptions. However, they maintain a ‘Sell’ rating with a revised fair value of Rs 3,400, from Rs 3,100), valuing the Royal Enfield business on a discounted cash flow methodology standalone EPS and VECV at 15x March 2026E EPS.

Emkay | Sell | Target Price: Rs 3,400

According to Emkay, Eicher Motors’ Q4 financial results aligned with expectations, due to lower raw material costs. However, for Eicher Motors’ Royal Enfield (RE) brand, growth prospects are viewed as challenging. 

Analysts point to several factors, including the slow uptake of recent launches like the Himalayan 450, concerns about the potential for incremental growth from upcoming 450cc launches given the segment’s limited size, and the continued absence of major replacement or upgrade demand for RE motorcycles.

Emkay has revised its FY26E earnings per share (EPS) upward by approximately 5 per cent on the back of ongoing recovery in the two-wheeler (2W) sector and the resulting margin improvement, projecting a 9 per cent profit after tax (PAT) CAGR over FY24-26E. Despite this, Emkay maintains a ‘Sell’ rating on Eicher Motors with a revised target price of Rs 3,400.

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