Eicher Motors Ltd - Another stellar quarter; Rich Valuations limit upside - Emkay

Reco: REDUCE
CMP: Rs 3200
Target Price: Rs 3000

- Q2CY13 EBITDA/APAT beats estimates by 11%/12% on a strong operational performance in both VECV/RE

- Operating leverage benefits push RE margins to 17.8% while lower incentives, price hikes lead to 7.6% margins in VECV

- Mgmt. targets 175k Royal Enfield sales in CY13 and would ramp up capacity to 250k units in CY14 for RE

- VECV to gain from increasing after sales network and launch of new truck models with higher inputs from Volvo

- Maintain REDUCE but revise our SOTP based TP to Rs 3,000 as we attribute a higher multiple of 12x EV/EBITDA for RE

Source : Equity Bulls

Keywords