Benzinga - Brokerages maintained their bullish stance on Eicher Motors (NS:EICH) after the company recorded in-line results in its June quarter.
What Happened: The company reported a 19.94% rise in net profit to ₹1,101.46 crore. The Royal Enfield maker's revenue gained 10.20% to ₹4,393.05 crore while EBITDA jumped 14.1% to ₹1,165 crore.
Royal Enfield volume saw a slight increase to 2,27,736 from 2,25,368 units in the previous June quarter. The company's JV with Volvo group, VE Commercial Vehicles (VECV)'s profit increased to ₹319 crore from ₹181 crore in the previous year.
The company launched the Royal Enfield Guerrilla 450 model, priced at ₹2.39 lakh in the June quarter.
Brokerage Views: Jefferies maintained a "buy" call with a target price of ₹5,500. The recent weakness in Royal Enfield volumes is a concern said the research firm. The research firm says the company would be a key beneficiary of 2-wheeler premiumization and the toughest phase of competition is behind the company now. However, the brokerage cut the earnings per share estimates by 2-4%.
Goldman Sachs (NYSE:GS) also maintained a "buy" call and hiked the target price to ₹5,600. The launch of the Guerrilla model and the upcoming new Classic model represent upside optionality, the research firm said. According to the brokerage, the higher export volumes are expected to benefit from the Guerrilla model. The VECV is also entering a period of lower taxes which adds 2% to the company's earning power, the brokerage added.
JP Morgan kept a "neutral" call while increasing the target price to ₹4,435. The margin beat in the quarter was driven by pricing. The VECV business should see gradual improvement during the year, the brokerage said. The brokerage also pointed out the management expectation that there will be improvement in the performance of the flagship models.
UBS also maintained a "buy" call with a target price of ₹5,820, an upside of 27% from the previous session’s close. The company registered a strong Q1 and the management is confident of volume recovery, the research firm said. The brokerage said while good operational performance for Royal Enfield continued in the quarter, product and marketing actions should help Royal Enfield revive domestic volumes.
Price Action: Shares of Eicher Motors gained 4.07% to ₹4,763.25 on Friday morning.
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