On July 6, 2023, HDFC Securities Limited issued its latest analysis on Eicher Motors, providing valuable insights into the investment prospects of the company. The analysis includes Eicher Motors share buy or sell recommendations, along with a new target price. Let’s take a look at HDFC Securities Limited’s latest analysis for more information.
HDFC Securities Limited recently issued Sell Call on Eicher Motors, along with a fresh target price of Rs 3,086.
Eicher Motors share Buy or Sell
First of all, let’s take a look at the current share price of Eicher Motors. To visualize these changes, we can refer to the Eicher Motors Share chart which displays the historical share prices, indicating the ups and downs over time.
Why Eicher Motors Share Sell
Eicher Motors was downgraded to REDUCE due to a significant increase in competitive intensity that has changed the business dynamics unfavorably for the company. The report mentions that over the last two days, both Harley Davidson (in partnership with Hero MotoCorp) and Triumph (in partnership with Bajaj Auto) have launched cruiser bikes at extremely competitive and similar price points, which are marginally higher than Eicher Motors’ best-selling Classic350cc (Chrome). This aggressive competition is expected to hurt Eicher Motors’ growth, which led to the downgrade to REDUCE.
Research Report
HDFC Securities Limited’s Report
We downgrade Eicher Motors to REDUCE (from ADD earlier) as a significant increase in competitive intensity has changed the business dynamics unfavorably for RE. Over the last two days, both Harley Davidson (in partnership with Hero MotoCorp) and Triumph (in partnership with Bajaj Auto) have launched cruiser bikes at extremely competitive and similar price points, which are marginally higher than RE’s best-selling Classic350cc (Chrome). What leaves us confused is the fact that while pricing is aggressive, both players seem to have very limited capacity to start with.
We hence believe that this is likely to be introductory pricing and unlikely to be sustainable in the long run for the features/brands on offer. Nevertheless, RE would be forced to reconsider its pricing/brand strategy very quickly, which will in turn drive margin pressure. Accordingly, we have now lowered our earnings estimates by 16-18% over FY24-25E as we revisit our growth and margin estimates. As a result, our TP is reduced to INR 3,086 per share (from INR 3,715 per share earlier).
We expect RE to be in a much better position to fight back once this competitive pricing stabilizes. However, if these competitive price points sustain for a higher-than-expected time, it would lead to further downside risks to our estimates.
Shareholding Pattern
Dec-22:
- Promoters: 49.21%
- FIs & Local MFs: 11.29%
- FPIs: 28.63%
- Public & Others: 10.87%
Mar-23:
- Promoters: 49.20%
- FIs & Local MFs: 10.06%
- FPIs: 29.85%
- Public & Others: 10.89%
HDFC Securities Limited Sell: Eicher Motors
For more detailed information and to read the official HDFC Securities Limited report on Eicher Motors, you can access the full PDF document in the link below.
| Company | Eicher Motors |
|---|---|
| AUTHOR | HDFC Securities Limited |
| DATE | 6 July 2023 |
| CMP | Rs 3,310 |
| TARGET Price | Rs 3,086 |
| Type | Sell |
| Report |
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