Eicher Motors (NS:EICH) recently disclosed its fourth-quarter results, aligning closely with expectations. While revenue slightly exceeded consensus by 1%, EBITDA fell slightly short by 1%, compared to Bloomberg consensus. Looking ahead, Eicher anticipates robust double-digit volume growth in the 250cc+ motorcycle category for fiscal year 2025, contrary to current consensus estimates hinting at lower single-digit growth.
Management is optimistic about forthcoming product launches within its 452cc platform, alongside new market entries and capacity expansions for the recently launched Himalayan 452 and Shotgun 650 models. These initiatives are poised to bolster domestic volume growth for fiscal years 2025 and 2026. Notably, production rates for the new Himalayan 452cc have surged approximately 40% higher than the previous quarter, indicating promising traction.
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Moreover, the company highlights improving retail volume trends in its international business, following macroeconomic challenges in fiscal year 2024. Anticipating a more substantial flow of wholesale growth, Eicher foresees enhanced profitability for fiscal year 2025 and beyond, building upon the previous year's EBITDA margin of 26.2%.
Additionally, Eicher underscores its strategic focus on expanding in high-potential markets, aiming to replicate its success achieved in India. While acknowledging the relative stability of developed markets like the US, Europe, and Australia, the company underscores the vast growth opportunities in regions such as Latin America and Southeast Asia.
In response to these promising developments, Goldman Sachs (NYSE:GS) adjusts its 12-month target price for Eicher Motors to INR 5,350, indicating a notable 15% upside potential from the previous estimate. With retail improvements in international markets and strategic plans for expansion in high-potential regions, Eicher Motors appears poised for sustained growth and profitability in the foreseeable future.
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While Goldman Sachs is bullish on the counter, there are other contrary opinions as well. The fair value of the stock is INR 3,867, depicting a downside potential of 18.2% from the CMP.
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A few reasons can be seen in ProTips - high revenue and price-to-book valuation multiple. There are other 2 key factors that should not be ignored - Analysts anticipate a sales decline this year which could be problematic. Even RSI is also suggesting the stock is overbought zone which is where fresh long positions should be avoided. That is why ProTips is important to have a glance at as it tells key information that could be missed by an investor otherwise.
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