Eicher Motors zooms after UBS double upgrades Royal Enfield maker to buy; check out target price
Eicher Motors shares were in high demand on March 20 after foreign brokerage UBS double-upgraded the stock to buy while raising its target price to Rs 5,000 from Rs 4,300 per share. According to UBS, the launch of Royal Enfields upcoming 450cc platform will address competition and growth concerns.
Eicher Motors shares surged on Wednesday after foreign brokerage UBS upgraded the food delivery stock to 'buy' from rating the food delivery company's stock to 'buy' from 'neutral' while raising its target price by Rs 700 to Rs 5,000 per share. Royal Enfield parent Eicher Motors' shares jumped as much as 5.9 per cent to Rs 3,938.6 apiece on BSE.
The brokerage's target implies a 34.5 per cent upside in the stock from its previous close.
Why UBS is bullish on Royal Enfield parent Eicher Motors
Here are some of the key things the brokerage highlighted while double upgrading the auto stock to 'buy':
- Royal Enfield to outperform industry in terms of domestic volume growth
- Upcoming launch of Royal Enfield's 450cc platform to address competition- and growth-related concerns
- Royal Enfield expected to launch products in the 450cc segment in July-September 2024
- Risk reward favourable for Eicher Motors
- Royal Enfield faces no risk from electrification
UBS estimates Royal Enfield's domestic volumes to grow at a CAGR of 10 per cent over during the three-year period ending March 2026, as against the industry average of 6-7 per cent.
Eicher Motors shares trade at a 20 per cent discount to Bajaj Auto as against a premium of 50 per cent over the past five years, according to the brokerage.
Strong Royal Enfield sales helped parent Eicher Motors clock a higher-than-expected 12.3 per cent jump in revenue to Rs 4,179 crore for the fiscal third quarter.
Meanwhile, Eicher Motors expects a revival in RE motorcycle exports after a gap of almost two years.
Earlier on Wednesday, Zee Business Managing Editor Anil Singhvi suggested investors buy Eicher Motors futures for targets of Rs 3,780, 3,810 and 3,850 with a stop loss at Rs 3,685.
Technical outlook
Technically, the stock is trading above its 30-, 50-, 100- and 200- simple moving averages, suggesting long-term bullish momentum, according to equity research portal Trendlyne.
Eicher Motors is available at a trailing 12-month price-to-earnings multiple of 28 times, lower than the industry median.
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