Eicher Motors witnessed a remarkable surge of over 4 percent on September 26, emerging as the top gainer on the NSE Nifty 50 during the morning trading hours. The surge came in response to a favorable move by global brokerage firm Jefferies, which not only raised the target price for Eicher Motors but also designated it as a preferred pick, alongside TVS Motors.
As of 9:50 am, the stock was trading at Rs 3,534, marking a substantial gain of 4.4 percent compared to the previous day’s closing on the NSE.
Jefferies analysts pointed to several compelling factors contributing to Eicher Motors’ robust growth prospects. These include the alleviation of competitive concerns, coupled with favorable tailwinds such as the recovery in demand for two-wheelers, the trend toward premiumization in the industry, and increased exports.
With a ‘buy’ rating assigned to the stock, Jefferies has revised the target price for Eicher Motors to Rs 4,150, indicating a potential upside of 22.5 percent from the closing price on September 25. This new target surpasses the previous projection of Rs 4,000.
Smooth Ride for Royal Enfield: Jefferies emphasized that Royal Enfield (RE) is well-positioned to capitalize on a potential rebound in demand for Indian two-wheelers. This optimism stems from RE’s distinctive product offerings and robust brand reputation. Furthermore, Jefferies stated, “RE should also benefit from significant headroom for Indian 2W demand to move to premium bikes.”
Valuation Expansion Anticipated: Bolstered by the strong tailwinds of two-wheeler demand recovery, the industry’s shift towards premiumization, and the potential for increased exports, Jefferies has assigned a valuation of 25 times PE (previously 24 times) for RE. Additionally, the commercial vehicle business has been valued at 5.5 times FY25 PB. Jefferies sees the potential for an expansion in RE’s multiples, especially if the company can effectively maintain its market share amidst intense competition.
Eicher Motors’ impressive performance in response to Jefferies’ positive outlook underscores the company’s promising trajectory in the evolving two-wheeler market.