Many of us before making an investment are indecisive as to which share would be worth our portfolio. I would suggest you to go through the fundamentals of Eicher Motors before you take a call.

Business Segment of EML:

  • Eicher Motors Limited (EML) is the owner of the iconic Royal Enfield brand.

Royal Enfield is the World’s oldest motorcycle brand in continuous production since 1901 and it is mainly focused on mid-size motorcycles (250 cc-750 cc). Their products are sold in India and 50 countries globally through exclusive stores and dealers.

Motorcycles – Bullet, Classic, Thunderbird, Himalayan, Interceptor 650, Continental GT 650

  • VE (Volvo group and Eicher motors) commercial Vehicles
Source: Google

VE Commercial Vehicles (VECV) designs, manufactures and markets reliable, fuel-efficient trucks and buses. EML’s joint venture VE Commercial Vehicles (VECV) with Sweden’s AB Volvo has pioneered the modernization of commercial vehicles in India and other developing countries.

Market Capture & Strength:

  • Eicher Motors is known for its cult motorcycle brand – Royal Enfield Bullet. Royal Enfield is the global brand in the mid-sized motorcycle segment.
  • Eicher Motors Limited (EML) occupies 95% share in the mid-size motorcycle segment and 29.4% market share in domestic Light to Medium Duty (LMD) segment.
  • With a market cap of ₹47,373 cr, stock is ranked 53.
  • Eicher Motors has low debt and zero promoter pledge
  • Eicher Motors has 915 exclusive stores in India and has further planned on its distribution expansion across India and World.
  • There are 42 exclusive Royal Enfield stores across UK, Colombia, USA, Mexico, UAE, France, Spain, Indonesia, Thailand, Philippines, Australia, New Zealand, Portugal, Malaysia, Brazil, Vietnam, and Argentina
  • Thestock has outperformed both the indices (Sensex and Nifty) since the company has been listed in NSE and BSE.
  • The shareholding pattern of the Promoters is 49.28%. (constant from past 6 months)
  • In last 3 months, mutual fund holding of the company has increased by 2.40%
  • In last 3 months,DIIs shareholding have increased by 4.32%.

Weakness:

  • The company faces domestic competition from its top competitors Bajaj Auto, Hero Motocorp, Ashok Leyland and Mahindra & Mahindra and competition from new international entrants like Harley Davidson, Benelli, etc.
  • In last 3 months, foreign institutional holding of the company has decreased by 3.48%
  • There is a major fall in Trailing Twelve Months (TTM) profit due to economic slowdown and pandemic.

Share price levels of Eicher Motors:

Image: Moneycontrol

However, Eicher Motors is currently trading at Rs.17349.35(dated:19th June 2020)

Lifetime high of Eicher Motors: Rs. 32617

52 week high of Eicher Motors: Rs. 23450

52 week low of Eicher Motors: Rs. 12450

Consolidated Financials:

However, Eicher Motors’ consolidated net profit slumped 44.2% to Rs 304.28 crore on 11% drop in net sales to Rs 2,190.32 crore in Q4 March 2020 over Q4 March 2019.

Announcements: The company announced and approved a stock split plan to increase liquidity and to make the shares more affordable to retail investors. Eicher motors board approved 10 for 1 stock split. The company will split each share of Rs. 10 into 10 equity shares of the face value of Rs. 1 each.

Valuations:

  • 52 weeks High / Low  23450.00 / 12450.10
  • ROCE: 40.59 % ROE: 27.63%
  • EPS(TTM): 669.26 Beta: 0.95
  • Price/Book: 4.75
  • Industry P/E: 15.67 Stock P/E: 25.92

Conclusion:

Currently, the stock is more than its intrinsic value but is a good time to consider the stock as its not in the overbought zone.

Levels to BODs and accumulate the stock: 15100-14800/ 13500/12800

Technical analysis

The chart shows a bullish momentum and hence the resistance levels to keep a watch at are : 18000/18700

Disclaimer: Kindly consult your financial advisor before making any investment and do your own study.

However, if you like my analysis and benefit from the same then please stay tuned to my page. Do watch out for these levels in few trading sessions.

Rating: 5 out of 5.