Operating performance in line

Company
09 Aug 2024
5 Min read 
  • Aniket Mhatre analyzes Eicher Motors' stock, estimating changes 
  •  CMP: INR 4,577, TP: INR 3,920 (-14%) 
  •  Bloomberg EIM IN Equity Shares: 274 million 
  •  Market Cap: INR 1254.1b / USD 14.9b 
  •  52-Week Range: INR 5059 / 3272
  •  Financials & Valuations (INR b) for Y/E March FY24 FY25E FY26E 
  •  Sales: 165.4 178.7 199.3 
  •  EBITDA: 43.3 47.0 52.0 
  •  Adj. PAT: 40.0 42.6 47.3 
  •  Adj EPS (INR): 146.3 155.6 172.8 
  •  EPS Gr (%): 37.3 6.4 11.0 
  •  BV/Sh (INR): 660 759 867
  •  Ratios: RoE (%): 24.2 21.9 21.2 
  •  RoCE (%): 24.1 21.1 20.8 
  •  Payout (%): 34.9 36.0 37.6 
  •  Valuations: P/E (x): 31.3 29.4 26.5 
  •  P/BV (x): 6.9 6.0 5.3 
  •  Div. Yield (%): 1.1 1.2 1.4 
  •  FCF Yield (%): 2.3 3.9 2.3
  •  Operating performance in line, RE to invest to generate demand 
  •  1QFY25 operating performance in line 
  •  ASP grew 9% YoY despite 1% YoY decline in volumes 
  •  Margins stable despite weak volume growth 
  •  Management expects domestic demand to pick up 
  •  FY25E/FY26E EPS cut by 5%/3% due to weaker-than-expected RE volumes
  •  Demand weakness visible in 1QFY25 
  •  EIM's 1QFY25 consol. revenue/EBITDA/adj. PAT grew ~10%/14%/20% YoY 
  •  RE volumes declined 1% YoY, realizations grew 9% YoY 
  •  Gross margin expanded 230bp YoY, EBITDA margin at 26.5% 
  •  VECV: Volumes/realizations grew 1% YoY, revenue grew 2% YoY
  •  Management commentary: Domestic EIM seeing improving conversion rates 
  •  Focus on promotional activities to revive demand 
  •  Exports for RE grew in 1Q, witnessing green shoots 
  •  VECV expects CV demand to revive in 2H 
  •  RE no longer an affordable cruiser bike, facing rising competitive intensity 
  •  Limited outperformance avenues for RE 
  •  New 450cc platform unlikely to be a big growth driver 
  •  Export retails improving, with wholesales catching up gradually
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