Eicher Motors - At inflection point - Motilal Oswal

Multiple growth drivers in place

- With several of its projects to commence in CY13-14, driving 28% sales CAGR and 34% EBITDA CAGR over CY12-15, Eicher Motors (EIM) is at an inflection point.

- Its motorcycle business will benefit from capacity expansion (new plant to start in 1QCY13), new launches (Thunderbird 500 and Café Racer), and network expansion.

- CV subsidiary, Volvo Eicher Commercial Vehicles (VECV), will benefit from the commencement of the Medium Duty Engine Project (MDEP) and ramp-up in HCVs.

- Buy with a target price of INR3,850, 45% upside over two years. EIM's strong balance sheet (net cash increasing to INR16.9b by CY15E) limits downside risk, in our view.

Source : Equity Bulls

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