The company lined up a capex plan to the tune of Rs 800 crore, which included setting up of a plant in Tamil Nadu and raising production capacity to 9,50,000 units as well.
Shares of Eicher Motors gained over 4 percent intraday as investors reacted to the firm’s capex plan announced on Tuesday.
The company lined up a capex plan to the tune of Rs 800 crore, which included setting up of a plant in Tamil Nadu and raising production capacity to 9,50,000 units as well.
“Our demand continues to exceed supply, and we continue to see strong growth from all our markets. Therefore, we have decided to expand our production capacity with the second phase of our Vallam Vadagal plant near Chennai, Tamil Nadu. We will also complete construction of our Technology Centre in Chennai this year, and invest further in the development of new products to meet upcoming regulations and to expand our portfolio for our global markets,” Siddhartha Lal, MD & CEO, Eicher Motors, said in a statement.
Brokerages have cheered this development and said that the guidance increase points to strong demand environment.
Brokerage: Jefferies | Rating: Buy | Target: Rs 31,880
Jefferies highlighted that the company raised FY19 production guidance raised to 950k units vs 900k and it reiterates strong demand environment.
Brokerage: CLSA | Rating: Buy | Target: Rs 39,300
CLSA highlighted that announcement of capacity expansion indicates good growth visibility. It is expecting 15% volume CAGR over FY19-21. It also said that expansion indicated strong demand growth outlook
Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 34,000
The global investment bank said that its calculations suggest a production output of 1.1 million In FY20 (Forecast Of 1.07k). It expects stabilisation as the market adjusts to the ‘new normal’ volume growth.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 34,104
Morgan Stanley said that FY19 guidance is 3% higher than out current sales estimate of 9.24 lakh units. It believes that this increase in FY19 capacity indicates confidence for Enfield bikes’ demands.