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