Eicher Motors, the parent company of the iconic Royal Enfield, witnessed a robust surge in its share price, climbing nearly 4% during Tuesday’s trading session, thus securing its position as the leading performer on the NSE Nifty 50 index. As of midday, the stock was quoted at Rs 3,500, reflecting a remarkable 3.35% upswing from its previous day’s closing figure.
This substantial uptick in share value was predominantly attributed to the positive sentiment fostered by global brokerage firm Jefferies, which unveiled a decidedly bullish outlook on Eicher Motors’ future prospects. Jefferies cited several factors bolstering its optimism, including a notable reduction in competitive pressures, a burgeoning demand for two-wheelers, the resonance of Eicher Motors’ premium offerings with shifting consumer preferences in India, and an expansion in the company’s overseas market presence.
Jefferies went a step further by revising its target price for Eicher Motors to Rs 4,150, an upgrade from its earlier mark of Rs 4,000. This revised target price implies a potential appreciation of 22.5% in the stock’s value relative to its closing price on the preceding trading day.
Additionally, Jefferies underlined the commanding position of Royal Enfield, a subsidiary of Eicher Motors, in capitalizing on the anticipated surge in two-wheeler demand within the Indian market. The renowned motorcycle brand, owned by Eicher Motors, is renowned for its distinctive offerings and steadfast brand reputation, positioning it favorably as Indian consumers increasingly gravitate toward premium motorcycles.
In terms of valuation, Jefferies adjusted its evaluation of Royal Enfield to 25 times its price-to-earnings ratio (PE), up from the previous estimate of 24 times PE. Meanwhile, the commercial vehicle segment was assessed at 5.5 times its price-to-book ratio (PB) for FY25.
It is crucial to emphasize that the viewpoints and recommendations mentioned herein are solely those of Jefferies. Potential investors are strongly encouraged to seek counsel from a qualified broker or financial advisor before making any investment or trading decisions.
