Prabhudas Lilladher recommended accumulate rating on Eicher Motors with a target price of Rs 33516 in its research report dated May 09, 2018.
Prabhudas Lilladher's research report on Eicher Motors
Eicher Motors' (EIM) Q4FY18 consolidated operating performance was on expected lines, wherein revenue growth was at ~34% YoY to Rs25.3bn (PLe: Rs25.5bn) and EBITDA margin came in at 31.5% (PLe: 31.6%). With non-operating income higher ~54% YoY as well as share of profit from its VECV joint venture growing ~53% YoY at Rs963mn, consolidated net profit for the company over Q4FY18 surged ~38% YoY to Rs6.5bn, marginally ahead of our expectations at Rs6.3bn.
Outlook
While H1FY18 was somewhat weak for Volvo Eicher Commercial Vehicles (VECV), it has registered robust growth over H2FY18 and with the surge in CV demand expected to continue, FY19 should see additional positives for VECV, rendering overall long-term outlook for EIM favourable. Introduction of premium variants in the 350cc segment, coupled with increase in spare part revenue would increase profitability and boost margins. We increase our EBITDA margin estimates by 120/130bps for FY19/20E and maintain 'Accumulate' with a target price of Rs33,516. At CMP, the stock trades at 30.5x FY19E and 26.5x FY20E consol EPS.
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