Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

Eicher Motors

BSE ID : 505200 NSE ID : EICHERMOT

RECOMMENDED PRICE 2133.00

PEAK FROM RECO 3886.00 82.18%

CURRENT PRICE 4615.70 Resource id #18

Eicher Motors Limited, incorporated in 1982, is the flagship company of the Eicher Group in India and a leading player in the Indian automobile industry.

Eicher Motors

Eicher Motors Limited, incorporated in 1982, is the flagship company of the Eicher Group in India and a leading player in the Indian automobile industry. Its 50-50 joint venture with the Volvo group, VE Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel-efficient commercial vehicles of high quality and modern technology, engineering components and provides engineering design solutions. Eicher Motors manufactures and markets the iconic Royal Enfield motorcycles.

The company has registered strong numbers for the quarter ending December 2011. The sales moved up 27% to Rs. 15766.40 million for the December 2011 quarter as compared to Rs. 12435.10 million during the year-ago period. Operating profit too jumped about 28% in Q4CY11 at Rs. 1538.40 million. EML has witnessed sharp growth across all segments coupled with increasing market gains. A comparatively good net profit growth of 55.74% to Rs. 854.40 million was reported for the Q4CY11 compared to Rs. 548.60 million of previous same quarter.

In Q4 the industry grew by around 10.6% and Eicher has outperformed the industry by a good margin; so for the year it grew at 26.6% over 2010 and for Q4 it grew by 25% so it has beaten the industry by 15% and that has resulted in market share gains.

EML's management look forward to another year of profitable growth with up gradation of its existing product range, capacity expansion and increasing its market reach.

Valuation

With leadership position in premium segment motorcycles and leisure biking, strong distribution channels, robust volume growth and high realizations and increasing market presence; Eicher Motors Ltd. growth prospects looks promising. We believe Eicher Motors is trading at an attractive valuation at 15.68x and 12.07x of FY12EPS of Rs.134.78 and FY13EPS of Rs.174.98. We initiate a 'BUY' on the stock with a target price of Rs.2600 (appreciation of about 23%) with the medium to long term investment horizon.

For full report, Click on the attachment

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EicherMotors_Multibagger_HemSec.pdf