Eicher Motors - Result Update - ICICI Securities

Eicher Motors (EIL) reported a muted Q4FY20 performance. Consolidated revenues were at Rs. 2,208 crore (down 12% YoY), with ASPs for Royal Enfield (RE) at Rs. 1.33 lakh/unit (up 3.5% QoQ) while sales volumes were at 1.6 lakh units, down 17% YoY. EBITDA margins were at 19.6% (down 540 bps QoQ), with subdued performance attributable to increase in all overhead costs as proportion of sales. Consequent consolidated PAT was at Rs. 304 crore, down 44% YoY. The company's board of directors approved sub-division of equity shares from face value of Rs. 10 to Rs. 1 i.e. split in the ratio of 1:10, subject to approval in the ensuing AGM.

Valuation & Outlook

For EIL, we factor in 3.7%, 1.5% sales, PAT CAGR in FY20P-22E. We like EIL for its dominant market position, robust financials i.e. net cash positive B/S (~Rs. 6,800 crore), double digit return ratios (~20% RoCE). Still, recent stock price run up, limits upside, going ahead. Hence, we downgrade EIL from BUY to HOLD valuing on SOTP basis at Rs. 18,070 (26 P/E to RE; 15 P/E to VECV on FY22E).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_EicherMotors_Q4FY20.pdf

Shares of EICHER MOTORS LTD. was last trading in BSE at Rs.16846 as compared to the previous close of Rs. 16418.85. The total number of shares traded during the day was 9512 in over 4138 trades.

The stock hit an intraday high of Rs. 16970.2 and intraday low of 15451. The net turnover during the day was Rs. 155001025.

Source : Equity Bulls

Keywords