Eicher Motors - Diwali Pick 2012 - GEPL Capital

Based on the growth potential emanating from its two JVs; with Polaris Inc and AB Volvo and considering the potential uptick in revenues from Royal Enfield and MDEP plant capacity expansions, we believe that there is considerable revenue visibility for the next 2-3 years.

We except revenue to grow at a CAGR of 30% from CY11 to CY13, EBITDA to grow at CAGR of 25% with EBITDA margin of 11%. Profit after tax is also expected to grow at a CAGR of 26% during the same period.

At the CMP of Rs2,524 EML is trading at 5.3x its CY2013E EBITDA. However, considering the robust growth potential, we value EML at 6.5x EV/EBITDA at its CY14E earnings and arrive at a target price of 2,987, which is a potential upside of 18%.

Source : Equity Bulls

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