CLSA on Eicher Motors
O-P, TP Rs 7651
Consolidated Ebitda margin was in line at 24.9% (down 57bps QoQ), with Royal Enfield (RE) facing c.90bps of commodity inflation in 4Q and a further 3.5% in 1QFY27
RE implemented price hikes of c.70bps in Jan and 170bps in Apr to partly offset the impact.
With cost optimisation and operating leverage benefits, RE remains confident in offsetting the bulk of the impact.
With utilisation nearing 90%, RE is expanding capacity via brownfield and greenfield expansion
Expect RE to outperform industry volume growth, driven by strong 350cc+ demand, & build in a 12% volume Cagr in FY26-28.
On VECV, turn cautiously optimistic on back of tough macroeconomic conditions amid ongoing Middle East crisis
GS on Eicher Motors
Buy TP Rs 8400 from Rs8000
Reported an in-line 4Q.
Revenue/EBITDA were +2%/+1% vs GSe
Gross margins were flat qoq with -90bps of commodity headwind offset by +70bps of price hike in Jan and +20bps of mix + value engineering.
Management highlighted production issues from labor & raw material/gas shortage, impacting May volumes, which are now resolved.
Current Inventory levels are thin at 7-8 days with dealer inventory running even lower.
175bps of price hike in April can offset 50% of ~300-350bps commodity impact with more offsets possible above this.
Management indicated that inquiries in May continue to be strong at +23% yoy
HSBC on Eicher Motors
Buy, TP Rs 8200
Management expects demand momentum to persist in export and domestic markets; inflation remains a near-term headwind
RE announced a greenfield expansion beyond the 2m units of annual capacity added by ongoing Cheyyar’s brownfield project
Stronger growth trajectory than industry justifies premium valuation
Morgan Stanley On Eicher Motors
Recommendation Equal-weight; Target ₹7763
Q4 – inline with estimates
Eicher expects growth momentum to continue in FY27
On exports, the company remained cautiously optimistic
Capacity enhancement – debottlenecking efforts aim to improve capacity to 1.6 million units from 1.4 million
CITI on Eicher Motors
Buy, TP Rs 8350
4Q slightly above estimates on better ASP and gross margin.
Mgmt outlook is positive for mid-segment bikes in India (Royal Enfield dominates the segment).
Healthy demand trends are manifested in strong growth in enquiry, even as Apr deliveries were impacted by manpower unavailability and LPG supply disruption.
Significant capacity addition is planned for RE- 1) current capacity is 1.46mn units/year, 2) post brownfield expansion capacity will be 2mn units by 2QFY28, 3) a greenfield facility is planned for Rs25bn
VECV demand trends are steady & new financing JV with Volvo should augment volumes
That said, cost pressures are rising, and RE price hikes undertaken thus far cover only 50% of impact
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