12 August 2014
2QCY14 Results Update | Sector:
Automobiles
Eicher Motors
BSE SENSEX
25,881
Bloomberg
Equity Shares (m)
S&P CNX
7,727
EIM IN
27.1
CMP: INR9,281
TP: INR11,401
Buy
Another strong quarter for RE; multiple triggers ahead
Consolidated revenues grew 34.5% YoY to INR22.5b (est INR21.7b) with EBITDA
M.Cap. (INR b) / (USD b)
251.5/4.1
margins improved by 270bp YoY/110bp QoQ to 12.7% (est 12. 5%) driven by robust
52-Week Range (INR)
9,350/2,975
operational performance at Royal Enfield (RE). Adjusted PAT (after minority) grew
1, 6, 12 Rel. Per (%)
9/83/144
71% YoY (13% QoQ) to INR1.57b (est INR1.58b).
Earnings call highlights
Financials & Valuation (INR Million)
Y/E Dec
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2014E
2015E
2016E
87,508 119,969 160,917
11,075 17,698 26,257
6,328
234.0
60.4
28.2
28.3
39.7
10.3
9,858 14,663
364.6
55.8
34.6
37.8
25.5
7.7
542.3
48.7
37.5
43.5
17.1
898.8 1,206.6 1,686.4
Royal Enfield:
a) Outlook remains strong with robust order book growth. b)
Guidance increased to 300k units for CY14 (v/s 280k), CY15 guidance at over
400k units. c) Further capacity expansion plans underway as current capacity
expected to be utilized by CY16.
VECV:
a) Demand outlook remains tough, though improvement signs visible and
expect to gather pace, b) Engine supplies to Volvo Group at ~3,200 units (v/s
2,638 units in 1Q and 2,534 in 4Q). c) Price hike of 1% undertaken in Apr-14.
JV with Polaris on track,
expect product launch in CY15.
Valuation and view: Upgrade EPS; Maintain Buy
We upgrade our CY14E/15E EPS by 5.4%/10.2% respectively driven primarily by
5.5
strong operating performance in RE. EIM trades at 39.7x/25.5x CY14E/15E EPS of
INR234/364.6 respectively. Maintain
Buy
with a target price of INR11,401 (CY16
SOTP based, discounted rate assumed at 12%).
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Chirag Jain
(Chirag.Jain@MotilalOswal.com); +91 22 3982 5418
Investors are advised to refer through disclosures made at the end of the Research Report.